Registrar of the District Court v Jack Balalis - [2008] SADC 19

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
REGISTRAR OF THE DISTRICT COURT v JACK BALALIS
[2008] SADC 19
Reasons of His Honour Judge Burley
3 March 2008
PROCEDURE - CONTEMPT, ATTACHMENT AND SEQUESTRATION
Registrar's summons alleging breach of Mareva injunction - defendant restrained from dealing with property. Company of which the defendant was a director also enjoined - whether actions as director constituted breach of injunction by the defendant - alleged granting of mortgage to secure loans - whether defendant guilty of contempt - service of order - whether dispensation should be granted.
District Court Rule 84.21; South Australian Supreme Court Rule O.42, r.7; Enforcement of Judgments Act 1991 s12; District Court Act 1991 s48, referred to.
Attorney General for Tuvalu v The Philatelic Distribution Corp [1990] 1 WLR 926; Madeira v Roggett [1990] 2 Qd R 57; Von Doussa v Owens (No. 2) (1982) 30 SASR 391; Att-Gen v Newspaper Publishing plc [1988] Ch 333; Stockton Football Co. v Gaston [1895] 1 QB 453; Hampden v Wallace (1884) 26 Ch D 746; Tchia v Rogerson (1992) 111 FLR 1; Deverall v Wannunup Development Nominees Pty Ltd (1994) 12 WAR 561; Re Proceedings for an alleged contempt against Animal Liberation (SA) Inc [2002] SASC 71, considered.

PROCEDURE
Amendment of summons at end of trial - no unfairness to defendant - amendment permitted
Criminal Law Consolidation Act 1935 s281, referred to.
Witham v Holloway (1995) 183 CLR 525; Inghams Enterprises Ptd Ltd v Timania Pty Ltd (2005) 221 ALR 823; R v Ayles (2007) 97 SASR 78; R v Kennedy (2000) 118 A Crim R 34; R v VHP Unreported NSW CCA - 7 July 1997, considered.

REGISTRAR OF THE DISTRICT COURT v JACK BALALIS
[2008] SADC 19

These are proceedings for alleged contempt. The Summons in this matter was issued at the direction of a judge of this court, whose order required the Registrar to pursue proceedings for alleged contempt against the defendant and others. In the Summons, it is alleged that the defendant breached an order of this court made on 15 August 2005 in Action No 1030 of 2003. In that action, a company called JM Properties Proprietary Limited (the company) sued Strata Corporation No 13975 Inc and Others. The third, fourth and sixth defendants in that action were Duke Construction Pty Ltd, Duke Properties Pty Ltd, and Anglican Superannuation Australia Limited. Those defendants obtained a Mareva injunction against the defendant, the company, and the defendant’s wife, Mrs Marina Balalis.
The relevant parts of the injunction are:
Until further order:
(a)JM Properties Ptd Ltd be restrained from disposing of, charging, incumbering or otherwise dealing with those assets held by it (including but not limited to Units 4, 5 and 6 of the Strata Corporation No. 13975 Inc) without the written consent of Duke Construction Ptd Ltd, Duke Properties Ptd Ltd, and Anglican Superannuation Australia Ltd, save that the property at 3/8 Railway Terrace, Port Elliot, may be sold, if the proceeds are to be paid entirely to mortgagees in respect of the property and in respect of legal fees incurred up to 15 August 2005.
(b)Marina Balalis and Jack Balalis be restrained from disposing of, charging, incumbering or otherwise dealing with assets whether real property or the business of Cos Holdings Pty Ltd (formerly Cos Catering Pty Ltd) without the written consent of Duke Constructions Pty Ltd, Duke Properties Pty Ltd, and Anglican Superannuation Ltd.
Particulars of the charges pursued against the defendant are as follows:
And in particular, you disposed of, charged, encumbered or otherwise dealt with assets the subject of the order without the consent of the third, fourth and sixth defendants as follows:-
1.1On or about 10 September, 2005, you, as one of the registered proprietors of the land comprised in Certificate of Title Register Books Volume 5096, Folio 450 (50A Clifford Street, Torrensville), agreed to borrow the sum of $52,000 from FinanceCo Pty Ltd, offering to the lender as security for the loan a mortgage and/or a caveat over the said title.
1.2Between 25-29 November, 2005, you, as a director of JM Properties Pty Ltd, the registered proprietor of the land comprised in Certificates of Title Register Books Volume 5856, Folio 714, Volume 5856, Folio 512, Volume 5853, Folio 859 (Units 4, 5, and 6 in the Renaissance Arcade), agreed to borrow the sum of $200,000 from Ralph Mitrovic and Giuseppe Sidari, offering to the lenders as security for the loan a mortgage and a caveat over the said titles, in addition to a personal guarantee as a director of the registered proprietor in respect of that company’s obligations pursuant to the loan agreement.
1.3On or about 22 December, 2005, you, as a director of JM Properties Pty Ltd, the registered proprietor of the land comprised in Certificates of Title Register Books Volume 5941, Folio 593 (Unit 3, 8 Railway Terrace, Port Elliot) agreed to vary the earlier loan agreement made in late November 2005 with Ralph Mitrovic and Giuseppe Sidari by borrowing an additional sum of $50,000, offering to the lenders as additional security for the now increased loan of $250,000, a mortgage and a caveat over the said Port Elliot title, in addition to extending your earlier personal guarantee as a director of the registered proprietor in respect of that company’s obligations pursuant to the now varied loan agreement.
The trial in respect of these charges commenced on 3 October 2007 and proceeded, with some interruptions, to the point where the final addresses commenced on 18 October 2007. Mr Crocker, counsel for the plaintiff, addressed first. During the course of his submissions, the question of the sufficiency of the wording of the charges set out above was raised by me. As a result of the exchange between myself and counsel, Mr Crocker made application to amend paragraphs 1.1, 1.2 and 1.3 of the summons by inserting in each of the paragraphs the words “and providing” after the word “offering” where it appears in each of those sub-paragraphs. It was the primary submission of the plaintiff that the concept of providing security was embraced by the expression “offering to the lender[s] as security”. However, in order to make explicit that which was implicit, Mr Crocker applied to amend in the manner I have referred to.
The defendant opposed the amendment. As I understand the defendant’s argument, if the “charges” were not amended as sought by the plaintiff, it would be open to the defendant to seek a verdict of acquittal on the basis that, whatever the plaintiff may have established by way of evidence in relation to any agreement to provide security and any provision of security, there was no evidence to suggest that the defendant offered properties as security for loans advanced by the lenders. It was contended that it would be unfair to the defendant to allow the amendment because he may lose the opportunity to obtain an acquittal based on the contention that there was no evidence of the offer of security.
Having heard argument on the question of amendment, I reserved my decision. I subsequently permitted the amendment and indicated at the time that I would state my reasons when I gave judgement on the contempt proceedings. This I now do before dealing with the substantive proceedings.
Since the decision of the High Court in Witham v Holloway (1995) 183 CLR 525, it is clear that proceedings for contempt, whether they arise from criminal or civil proceedings, are to be dealt with in accordance with the procedural and evidential requirements that relate to criminal proceedings. That is reflected in Rule 93.06 of the District Court Rules 1987 pursuant to which these proceedings are pursued.
I mention at the outset that where a charge of contempt is amended during the course of proceedings, the defendant must be given a proper opportunity to respond: Inghams Enterprises Pty Ltd v Timania Pty Ltd (2005) 221 ALR 823. In this case the defendant did not suggest that, if the amendment were granted, it would be necessary to adjourn the proceedings. On the contrary, when I reserved judgment on the application for amendment, I indicated that I would announce my decision when addresses were to be resumed some days later, unless counsel submitted to the contrary. Neither counsel submitted to the contrary.
The leading South Australian authority on the amendment of an Information is R v Ayles (2007) 97 SASR 78 (CCA). That case dealt with the power to amend contained in s281 of the Criminal Law Consolidation Act 1935; it involved a prosecution for indecent assault. The particulars of the charge alleged that the appellant indecently assaulted the victim between certain dates. The victim’s evidence was such that the offence took place outside the alleged period so the prosecutor requested and was granted an amendment extending the period set out in the particulars. When the appellant gave evidence he admitted the incident but said that it had occurred outside the period referred to in the amended charge. The trial judge accepted that evidence. The trial was by judge alone. When the trial judge delivered her verdict, she ordered that the count be amended to include the time at which the appellant had admitted the offence took place. Such an application to amend had been foreshadowed by the prosecutor but was never made. On appeal, several points were raised, including the contention that an Information cannot be amended to substitute a new charge and, alternatively, if such a power to amend existed, it was, in the circumstances of that case exercised unfairly giving rise to a miscarriage of justice. Doyle CJ with whom the other members of the court agreed, made a number of observations about the power to amend in s281 of the Criminal Law Consolidation Act. These are summarised conveniently in paragraph 6415.5 of Criminal Procedure as follows:
·The power to amend only arises where the Information is defective or there is a variation between a particular and the evidence;
·The power to amend is wide;
·Trial judges have a responsibility to ensure proper amendments are made and can amend of their own motion subject first to raising the point with counsel;
·Where it does not cause injustice to the accused an amendment may introduce a new charge, although possibly not where it is unrelated to the existing charge;
·Unless the amendment introduces a new element into the trial or raises a matter on which issue has not been joined by a plea of not guilty, a re-arraignment of the accused on the amended Information is not necessary.
These principles apply by analogy to the application to amend the “charges” in this case.
It is clear from Ayles and the other cases cited by the learned author of Criminal Procedure that injustice to the defendant is of crucial significance in deciding whether or not to allow the amendment. Mr Healey, counsel for the defendant, was unable to point to any prejudice to his client beyond the loss of the opportunity to apply for an acquittal based on an alleged lack of evidence. He suggested that, given further time, additional prejudice might be ascertained and articulated. When the amendment was first raised, I adjourned the trial at about mid-morning to resume after the luncheon adjournment to give Mr Healey the opportunity to consider the application and to obtain instructions from his client, who was present in court. It seemed to me that that period of time was sufficient for counsel to ascertain, at least an outline, whether or not there was the potential for irremediable prejudice if the amendment were permitted.
In the circumstances, the only basis for unfairness advanced by the defendant was that, if the amendment were permitted, it would unfairly deprive the defendant of a chance of acquittal. That might be literally true, but it is a loss which arises out of a technicality.
I characterise the proposed amendment as correcting something which is technically defective on the following basis. If the present particulars are read literally, the alleged breach by the defendant consists of an offer to provide security as opposed to, for example, an agreement to provide security in the sense that a lender requests security and the borrower agrees to provide it. It was abundantly clear from the plaintiff’s opening that the case advanced by the plaintiff in relation to paragraphs 1.1, 1.2 and 1.3 of the summons was based on the assertion that the defendant, either as a director of the company or in his own right in relation to his own property, offered to provide and provided security. Reference was made to clause 8 of each of the three loan agreements relied upon by the plaintiff whereby, it was asserted, the corporate borrower and the individual borrowers respectively accepted the requirement that they were to provide security of some sort, whether by way of an equitable charge supported by a caveat or by way of a mortgage in registrable form. In those circumstances, it was at least arguable that an agreement to provide security constituted, in equity, a charge on the property offered as security.
It was initially submitted by Mr Crocker that the use of the expression in the summons “offering to the lender” embraced the concept contemplated by clause 8 of the respective loan agreements. Technically, as a matter of semantics, this may not be so and consequently, he adopted the prudent course of applying to amend so that the charges contained in the summons were consistent with the way in which he opened and presented his case.
Mr Healey relied upon the decision of the New South Wales Court of Criminal Appeal in R v Kennedy (2000) 118 A Crim R.34. The facts of that case were not dissimilar to the facts in R v Ayles in the sense that the period during which the sexual offence with which the appellant was charged was extended by way of amendment. The appellant was arraigned on 21 February 2000 but the trial was adjourned to 23 February 2000. On that date the prosecution applied to amend two of the counts to provide for a period during which the offences were alleged to have been committed, those counts initially having asserted that the offences were committed on or about a specified date. The amendment was made without objection from the appellant’s counsel. The complainant and her mother both gave evidence about the date upon which one of the offences was said to have been committed. They each said that they saw the live telecast of the Royal Wedding which was at the trial proved to have been telecast on 29 July 1981. Differing evidence was given by the complainant and her mother about whether they watched the live telecast of the Royal Wedding together.
The prosecutor made the amendment so as to advance a submission to the jury that what was seen could have been a replay as opposed to a live telecast. The CCA came to the conclusion that a miscarriage of justice was occasioned by the granting of leave to the Crown to amend and a miscarriage also occurred when the Crown put to the jury a case not based upon the evidence admitted in the trial.
Mr Healey also relied upon the decision of R v VHP, an unreported decision of the New South Wales Court of Criminal Appeal delivered on 7 July 1997 where Gleeson CJ said at 15:
As a general rule, what the crown needs to establish in order to obtain a conviction are the essential facts alleged in the indictment, and if the crown fails to establish an essential fact, or a particular which has been provided before the trial, or which emerged from the evidence of the crown witnesses, that is not fatal. However, that generalisation may, in any given case, need to be qualified. Two examples of possible qualifications are of present relevance. First, in some circumstances the requirements of procedural or substance and fairness may restrict the capacity of the crown to depart from particulars. Second, the evidence in the case may be such that it would not be open to a jury, acting reasonably, to treat one part of the crown’s case as reliable, and another part as unreliable.
Having cited that passage at paragraph [33] of his judgment, Studdert J in Kennedy said at [34]:
It does not seem to me that it was possible to treat the complainant’s evidence as reliable as to the commission of the offence if it was not reliable as to the date upon which she said it occurred. Yet the effect of the amendment was to obscure this difficulty and the amendment resulted in the jury being left to consider a crown submission contradicted by the evidence of the complainant that what she was watching on the night of the offence was a replay of the Royal Wedding rather than a live telecast. It seems to me that the amendment resulted in unfairly depriving the appellant of the possibility of an acquittal which the indictment prior to amendment would have presented.
Mr Healey argued that if the amendment were to be allowed, the defendant would be deprived of the possibility of an acquittal such that the same degree of unfairness as found to exist in the decision in Kennedy would apply to the defendant. I cannot agree with this submission. The proposed amendment in this case does not confuse, it clarifies. It cannot be said that the defendant, if the amendment were permitted, would have been prejudiced because he might have presented a different case had the charge been worded originally in the manner of the proposed amendment. The detailed opening of counsel for the plaintiff made it clear what the plaintiff was alleging in relation to the alleged breaches of the Mareva injunction. This was particularly so when, during the course of the opening, I questioned Mr Crocker about the significance of the provisions in the loan agreements relating to the provision of security. The fault of the present wording of the charges is that the word “offering” might, without the amendment, have to be given too wide an interpretation. There was no reason why that situation should have been permitted to persist, provided that there was no unfairness to the defendant. I formed the opinion there was no unfairness and consequently I permitted the amendment as sought to paragraphs 1.1, 1.2 and 1.3 of the summons.
Liability of a director – counts 1.2 and 1.3
It is convenient at this stage to deal with an aspect of the counts in the summons which allege conduct of the defendant in his capacity as a director. The allegations are set out in paragraphs 1.2 and 1.3 of summons. This aspect of the plaintiff’s case raises the question: can a director be personally liable for breach of an injunction committed by the company of which he is a director if the company’s breach is constituted by the actions of the director performed on the company’s behalf?
Mr Crocker referred to a number cases including Attorney General for Tuvalu v The Philatelic Distribution Corp [1990] 1 WLR 926, where the Court of Appeal dealt with an appeal in respect of contempt proceedings. The court held that a director had failed to take the necessary steps to ensure that an injunction against the company of which he was a director was complied with. Reliance was placed on RSC Ord. 45, r.5, which provided that an order of committal could be sought against the director if the company disobeyed the order.
In Madeira v Roggett [1990] 2 Qd R 57, a case more directly in point because it dealt with the positive actions of a director rather than a failure to ensure compliance, the plaintiff successfully relied on the Queensland equivalent of RSC Ord 45, r.5, namely, O.47 r.30. The court held that the director was liable because O.47 r.30 applied to him.

As I understand the plaintiff’s submission, Rule 84.21 of the District Court Rules 1987 is said to have the same effect as RSC Ord. 45, r.5, at least to the extent that it permitted contempt proceedings to be brought against the director of a company whose actions constituted the contempt.
DCR 84.21 is as follows:
84.21A judgment or order against a body corporate which has been wilfully disobeyed may, by leave of the court, be enforced by sequestration against the property of the body corporate or by attachment against the directors or other officers thereof, or by sequestration of their property.
The attachment and committal procedures were considered by the Full Court in Von Doussa v Owens (No. 2) (1982) 30 SASR 391 at 395. Mitchell J referred to O.42, r.7 of the South Australian Supreme Court Rules 1947 which provided:
A judgment requiring any person to do any act other than the payment of money, or to abstain from doing anything, may be enforced by writ of attachment or by committal.
Both DCR 84.21 and O.42, r.7 deal with enforcement of an order as opposed to punishment for breach of an order.
Mitchell J concluded that a judgment requiring a person to do an act may be enforced by writ of attachment and a judgment requiring a person to refrain from doing an act may be enforced by committal. In my opinion, the authorities dealing with the differences between attachment and committal with regard to a contempt of court must also be read in light of DCR 93.08 which sets out the punishments which the court may impose for contempt of court. Sub-rule (1) provides for the punishment of committal of the person to prison, the payment of a fine or the imposition of a good behaviour bond. The defendant may also be required to pay the costs of the proceedings.
Because DCR 84.21 relates to enforcement of an order rather than punishment for breach, it only permits an application which seeks attachment against the director or sequestration of the director’s property. Specifically, it does not contain the provision, present in RSC Ord. 45, rule 5, which authorises an order for committal against a director (RSC Ord. 45, r 5 (1)(b)(iii)). Even though sequestration and attachment are remedies available in contempt proceedings,[1] they are remedies directed to ensuring compliance with an order as opposed to imposing a punishment for breach of a court order. That punishment is the object of these proceedings is evident because the time has long since passed for the need to enforce compliance with the Mareva injunction alleged to have been breached by the defendant.
[1] See, for example, Barrie & Lowe, Law of Contempt, 2nd Ed., at 324 and at 429
Because DCR 84.21 relates to enforcement and does not authorise committal proceedings against a director in the manner contemplated by RSC Ord.45 r.5, it follows that, if the plaintiff is to establish counts 1.2 and 1.3, authority to pursue these counts against a director must be conferred by statute or found in the common law.
Section 12 of the Enforcement of Judgements Act 1991 authorises contempt proceedings, but the provision says nothing about proceedings against a director of a company.
Section 48 of the District Court Act 1991 confers upon the court the same powers which the Supreme Court has in respect of contempts of the Supreme Court. The section came into operation on 3 February 2002 and therefore governs these proceedings. The section does not specifically deal with proceedings against directors. The only provision arising from the application of Section 48 dealing with directors is SCR 84.21, which is the same as DCR 84.21.
My researches have not revealed any other applicable statutory provision. It follows that the plaintiff must look to the common law for authority to proceed against the defendant in his capacity as a director.
The position with regard to contempt proceedings against those who assist in the breach of an injunction is dealt with in Arlidge Edie and Smith on Contempt, 3^rd Edition, at paragraph 12 – 109, where it is said:
It is necessary to consider what special factors apply to directors so as to give rise to liability on their part, in circumstances where a servant or agent would not be liable. Were it not for specific provisions contained in [Civil Proceedings Rules, Schedule 1, Order 45.5], there would be no need for separate consideration arising purely from their status as directors. Where a director is not a party to the litigation himself, and is thus not directly bound by an order against the company, he could be personally liable for a criminal contempt, at common law, but only on same basis as everyone else; that is to say if he “aided or abetted” or did an act intending thereby to subvert the effect of the order.
The Civil Proceedings Rules referred to are the later enactment of what was previously RSC Ord. 45, r.5. Two cases were cited in support of the proposition that, if RSC Ord.45, r.5 is put to one side, a director could only be guilty as an aider and abetter. The first of these is Seaward v Paterson [1897] 1 Ch 545 (CA). That involved breaches of an injunction in which one of the defendants was said to have participated even though he was not a party to the original proceedings. Lindley LJ said (554) that such a defendant:
….. is bound like other members of the public, not to interfere with, and not to obstruct, the course of justice; and the case, if any, made against him must be this – not that he has technically infringed the injunction, which was not granted against him in any sense of the word, but that he has been aiding and abetting others in setting the Court at defiance, and deliberately treating the order of the court as unworthy of notice. If he has so conducted himself, it is perfectly idle to say that there is no jurisdiction to attach him for contempt as distinguished from a breach of the injunction, which has a technical meaning.
I do not think that the fact that the defendant in this case has been specifically named in paragraph (b) of the injunction is a point of distinction. The Registrar is seeking to obtain orders against the defendant, not only for allegedly breaching injunctions directed towards him, but also for performing the acts which constituted the alleged breach by the company. This is the effect of counts 1.2 and 1.3. Where Lindley LJ referred to a person against whom a contempt order was sought as not being a party to the proceedings, such a person is in the same position as the defendant who was a director of a company which allegedly breached an order by the actions of that director.
The other case is Att-Gen v Newspaper Publishing plc [1988] Ch 333. That case was part of the “Spycatcher” litigation referred to in paragraph 1-135 of Arlidge, Edie and Smith. It was a case involving “those who deliberately interfered with the administration of justice by undermining judicial orders”. The court held that they may be found guilty of contempt, although they were not directly bound by the order. The judgement of Sir John Donaldson MR made reference to those who knowingly assist in the breach of an order (at 367A). His Lordship said:
That this is the position is made even clearer by the two motions Lord Wellesley v Earl ofMornington (1848) 11 Beav.180 and Lord Wellesley v Early of Mornington (No. 2) (1848) 11 Beav.181. There the injunctive order omitted any reference to servants or agents. Lord Langdale MR dismissed the first motion to commit Mr Batley, the Earl’s land agent, who had cut down some trees which the Earl had been forbidden to cut. He did so because the motion was based upon an allegation that Mr Batley had acted in breach of the order. As Lord Langdale MR pointed out, the order was not addressed to Mr Batley, and he was not enjoined thereby. However, the second motion accused Mr Batley not of breaching the order, but of knowingly assisting in a breach of the order and thereby obstructing the process of the court. As Lord Langdale MR put it, at p.183:
“If the matter had been pressed, I should have found it my duty to commit Mr Batley for his contempt in meddling with these matters; …”
The above analysis, in my opinion, leads to the conclusion that the only basis upon which the plaintiff may proceed against the defendant in respect of his alleged conduct on behalf of the company is to establish that he aided and abetted the commission of a breach of the Mareva injunction by the company. This has not been done. The wording of counts 1.2 and 1.3 put the defendant in the position of a primary, as opposed to a secondary, offender.
The relevant parts of the charge contained in paragraph 1.2 are as follows:
And in particular, you disposed of, charged, incumbered or otherwise dealt with assets the subject of the order … as follows:-
1.2Between 25-29 November, 2005, you, as a director of J.M. Properties Pty Ltd agreed to borrow the sum of $200,000 … offering and providing to the lenders as security for the loan…
The charge in paragraph 1.3 is in similar terms. These charges have as their underlying basis the assertion that the conduct of the defendant constitutes a breach of the injunction as opposed to the conduct of the company through the agency of the defendant as its director. The charges clearly do not assert that if any liability is to be imputed to the defendant, it is in his alleged capacity as an aider and abetter. It is for this reason that I think the charges in paragraphs 1.2 and 1.3 must fail and a verdict of acquittal should be entered.
The Elements of the Alleged Breach – count 1.1
According to the plaintiff, the following elements must be established beyond reasonable doubt by the plaintiff:
1.     That a clear and unambiguous order was made by the court;
2.     That the defendant has committed an act which constitutes a breach of that order;
3.     That at the time of the commission of the act the defendant had knowledge of the relevant court order and its terms;
4.     That the defendant intended to do the act that constituted the breach of the order.
The defendant accepted that the order referred to in paragraph 1 of the summons was made by the court on 15 August 2005. It is not clear whether the defendant contended that the order was ambiguous, but I should in any event express my view in relation to the first element. In my opinion, the order is sufficiently clear when it precluded the defendant from “charging” his assets. If the defendant and his wife provided or agreed to provide a mortgage (unregistered or otherwise) over the jointly held property referred to in count 1.1, that constitutes a charging of the property.
I should mention also the position with regard to the inclusion in the injunction of a reference to the written consent of those who obtained the injunction. The plaintiff alleges that no written or other consent was given to the defendant by the relevant defendants named in the injunction to do any of the acts alleged in any of the counts pursued against the defendant. The defendant admits this allegation.
As to the second element, the defendant contended that the plaintiff had failed to establish beyond reasonable doubt the facts necessary to establish the alleged breach of the order set out in count 1.1.
As to the third element, knowledge of the order, the defendant contended that the plaintiff had not complied with r.84.04(3) which requires the order to be served personally upon the person required to obey the same. The plaintiff accepted that the order had never been served personally on the defendant, but argued that it was sufficient if the plaintiff established beyond reasonable doubt that the defendant had knowledge of the terms of the order prior to its alleged breach by the defendant. In any event, the plaintiff applied for an order dispensing with the requirement of personal service. In my opinion, for reasons which I will refer to later, the application for dispensation is essential to the plaintiff’s case because merely establishing that the defendant had knowledge of the order is insufficient.
The application for dispensation
Reliance was placed on DCR 3.04(a) which permits the court to dispense with compliance with the requirements of the rules.
Linked to the questions of service of the order and knowledge of its contents, is the requirement of DCR.84.04(3A) which requires the endorsement on the order of a warning to persons affected by the order of the possible consequences of their failure to obey the order. Exhibit R7 is a copy of the order of 15 August 2005. It contains the appropriate endorsement required by r.84.04(3A).
Where such an order is personally served on a person required to comply with it, proof of such service must include proof that the appropriate endorsement was on the order at the time of service: Stockton Football Co. v Gaston [1895] 1 QB 453. If service of the order is effected without the endorsement, it is not open to the party who obtained the order to take steps to enforce compliance with the order: Hampden v Wallace (1884) 26 Ch D 746; Benabo v William Jay and Partners Ltd [1941] Ch 52.
My attention has also been directed to DCR93.14. The rule provides that the court may dispense with personal service and the requirement to include a cautionary endorsement where it is just and convenient to do so provided that the court is satisfied that the person required to abide by the order had knowledge of the substance of the terms of the order and has been evading service. There was no suggestion that the defendant evaded service of the order of 15 August 2005. Consequently, DCR 93.14 has not been relied upon by the plaintiff.
In Von Doussa v Owens (supra) the court also had to consider whether or not the then Supreme Court Rules permitted the court to entertain an application for dispensation from the requirements of the rules, namely, the requirement to serve the order personally and the requirement to have the cautionary endorsement on the order. The court concluded that the relevant rules gave such power. I am satisfied that DCR3.04(a) confers the same sort of power upon the court. Consequently, I am able to entertain an application for dispensation with the requirement of personal service.
It will be necessary to examine the factual basis upon which the application for dispensation has been pursued, but before doing so, it is appropriate to note that questions of service of the order, the requirement to include the cautionary endorsement and notice of the order and its terms are interrelated. In my opinion, the requirement that the order (containing the cautionary endorsement) be served personally on the defendant is based upon the proposition that a person cannot be pursued for contempt of an order of the court unless they are aware of the existence of the order. They must also be aware of the sanctions that may be brought to bear if there is a deliberate breach of the order. To this extent, the power to dispense, and part of the basis upon which dispensation should be granted, is reflected in the terms of DCR 93.14 where it refers to the requirement that the court be “satisfied that the person had knowledge of the substance of the terms of the order”.
I mention also DCR 12.03(d) which provides:
12.03 Any document required to be served personally shall be deemed to have been personally served where:
…
(d) an answering document is filed or served after service;
…
(my emphasis)
The plaintiff argued that because, after the making of the order and the provision of a copy of it to the defendant’s solicitor, an application was made to vary the injunction, the affidavit in support of the application was “an answering document” as referred to in paragraph (d) of the rule. In my opinion, that rule cannot be relied upon by the plaintiff to prove service on the defendant because, firstly, the application subsequently to vary the injunction cannot be regarded as an answering document in the sense that a defence is in answer to a statement of claim or an affidavit in opposition to an application is an answer to an affidavit in support and secondly, DCR 12.03(d) refers to what occurs after service of the document required to have been personally served. In other words, the rule is directed to proof of personal service in the circumstances contemplated by the rule as opposed to the fact of personal service as required by, for example, DCR84.04(3).
Reference has also been made to authorities which are said to suggest that, even though the defendant in a contempt action was not personally served with the order, notice of the order is sufficient even in circumstances where the rules require personal service. The cases are not easy to reconcile but it seems to me that if, factually, it is established beyond reasonable doubt that a defendant to contempt proceedings had notice of the order and its terms and if the failure to comply with the rules is satisfactorily explained, personal service may be dispensed with.
All of the authorities require strict adherence to the provisions of the rules because the defendant is liable to imprisonment. The fact that DCR 93 refers to criminal procedures and their requirements reflects that position. This means that the court will not lightly grant a dispensation or proceed to a finding that the defendant has had sufficient notice of an order other than in cases where no reasonable doubt could be said to exist.
In Tchia v Rogerson (1992) 111 FLR 1, Angel J, when dealing with the question of the power of the court to dispense with the requirements of the rules in the context of a contempt application said (at 7):
… I am not unmindful that contempt proceedings are of a criminal character: rule 75.11 of the Supreme Court Rules, Hinch v Attorney General (Vic) (No. 2) (1987) 164 CLR 15 at 50, Day v Middrie (1991) 103 FLR 263, and that the liberty of the subject being at stake the utmost strictness in both procedure and proof is required: Clifford v Middleton [1974] VR 737, Commissioner of Water Resources v Federated Engine Drivers and Fireman’s Association of Australasia, Queensland Branch [1988] 2 Qd R 385, and Drummoyne Municipal Council v Lewis [1974] 1 NSWLR 655. It has been said the general power to dispense with compliance should not be exercised unless the purpose and requirements of the procedural rules have been fulfilled in a manner otherwise than in the form provided: see Clifford v Middleton (supra) (at 741). It seems to me, with respect, that formulation too narrowly confines the general dispensation power. Holland J in Drummoyne Municipal Council v Lewis (supra) (at 658) said in relation to contempt that dispensation with the rules of court ought to be exercised sparingly and only when special circumstances justify non-compliance with the rules. I remind myself the procedure is not an end in itself, but a means to an end, which is the attainment of justice, and that “… the relation of rules and of practice to the work of justice is intended to be that of handmaid rather than mistress …”: Re Coles and Ravenshear [1907] 1 KB at 4 per Collins MR, and I respectfully consider that even in cases of contempt procedural requirements may be dispensed with when the furtherance of justice demands it: cf Von Doussa v Owens (No. 2) [supra] at 402, per Walters J.
Whilst I accept what his Honour says about the narrowness of confining the discretion to cases where there has been compliance by other means with the purpose and requirements of the procedural rules, such indirect compliance remains material to (but not, by itself, determinative of) the question of whether or not a dispensation should be granted.
The cases also establish that there must be a good reason for the granting of a dispensation: see Holland J in Drummoyne Municipal Council v Lewis (supra) at 658 where “special circumstances” were required to be established. In that case, the plaintiff Council had obtained an order preventing the defendants from carrying on a tow truck operator’s business at residential premises. The proceedings had been served on the defendants who did not enter an appearance. Instead of serving the injunction on the defendants, a Council officer notified the defendant of the order. There was no explanation as to why that procedure was adopted in preference to compliance with the relevant rule of court that required personal service on the defendant. Holland J held that, in the absence of circumstances justifying non-compliance with the rules, no dispensation would be granted. A similar approach was taken by Anderson J in Deverall v Wannunup Development Nominees Pty Ltd (1994) 12 WAR 561. His Honour came to the view that he had power to “condone the irregularities that have occurred but that it was not appropriate to do so”. He said:
The injunction was obtained during the morning of Monday, 31 October. It was not a weekend or out of hours injunction. It does not seem to have been a case in which the ordinary procedures could not have been followed after the order had been obtained. I do not consider there is any good or valid reason for failure to draw up and extract and serve a copy of the order, properly endorsed. It is not a case in which the defendants had made up their minds to ignore the order and defy the court so that service of a properly endorsed order would have been a useless formality.

In cases where an exemption from the requirement to effect personal service was granted, not only was it clear that the respective defendants were aware of the terms of the order, but they each expressed that they would not comply with the order in any event, cf Von Doussa v Owens (No. 2) (supra) and Re Proceedings for an alleged contempt against Animal Liberation (SA) Inc [2002] SASC 71, an unreported decision of the Chief Justice. In each case, service of the order, the contents of which were known to the defendant, would have made no difference to the defendant’s attitude to compliance.
In my opinion, there has been no or no adequate reason given by the plaintiff for not complying with the rules with regard to service of the order on the defendant. It is not in dispute that after the order was made a copy of the same was sent to the solicitors acting for the company, J.M. Properties Pty Ltd, of which the defendant was then a director. The letter asked the company’s solicitor to advise whether personal service was required in respect of the directors. Such advice was requested within three business days in writing in default of which arrangements would be made for personal service. The company’s solicitor did not reply to that letter but the plaintiff took no steps to effect personal service of the Mareva injunction on the defendant.
In these circumstances, even if it is assumed that the defendant had knowledge of the order and its terms, the absence of any or any sufficient explanation as to why the rules were not complied with precludes the granting of an exemption. There has been no suggestion that service of the order would have been futile. No extenuating circumstances have been advanced. The only basis for the exemption was the contention that the defendant knew of the order and its terms. As I have said, even if that is assumed to be correct, it is insufficient.
In arriving at that conclusion, I have taken into account the well established practice (not applicable to this case) that, where a party is in court when the injunction is granted, the party is taken to have notice of the order so that any breach prior to service of the order may be the subject of contempt proceedings. That is not a practice which lends support to the plaintiff’s argument that knowledge without service is sufficient. The practice only covers the period between the making of the order and the time at which personal service would be effected. It is not a practice which has the effect of displacing the requirement of the Rules that the order be served personally unless the person to be served waives compliance. There was no express or implied waiver in this case.
For these reasons, the dispensation from the requirement to serve the order will be refused. In the absence of personal service of the order, there should be a verdict of acquittal on count 1.1.
In any event, I do not consider that the plaintiff has established the required knowledge on the part of the defendant. For the sake of completeness I intend to set out briefly why I have arrived at that conclusion.
It is sufficient to say at this stage that I have taken into account the plaintiff’s submissions, and the evidence said to support those submissions, relating to the plaintiff’s contention that the defendant had sufficient notice of the content of the order prior to its alleged breach by the defendant. In my opinion, when that question is looked at in the light of the requirement that the plaintiff establish his case beyond reasonable doubt, it is by no means clear that the defendant was aware of the content of the order prior to the alleged breach. The two main contentions advanced by the plaintiff were that soon after the order was made, and well before the alleged breach, applications were made by the company (of which the defendant and his wife were then directors) to vary the order and secondly, that a copy of the order had been supplied to the solicitors acting for that company. The plaintiff’s case is based on the drawing of an inference that the combination of those circumstances must lead to a finding that the defendant was aware (a) of the content of the order and (b) that if he breached it, proceedings for contempt might be brought against him. I do not consider that such an inference may be drawn to the extent that it constitutes proof beyond reasonable doubt of the defendant’s awareness of these matters. In particular, there were two directors of the company, the defendant and his wife, and the evidence, taken as a whole, suggests that the defendant’s wife took a more dominant role in the running of the business conducted by the company. It is a reasonable possibility that the defendant was not a participant in the acts which are said to give rise to the inference that he was aware of the terms of the order.
Thus far I have dealt with the first and the third elements of the alleged contempt. The question of service of the order formed part of my analysis of the third element. Because of the conclusions to which I have come relating to the entry of verdicts of acquittal, it is not strictly necessary for me to deal with the second element, that the defendant has committed an act which constitutes a breach of the order, and the fourth element, that the defendant intended to do the act that constituted the breach of the order. Again for the sake of completeness, I propose briefly to state my approach and conclusions in relation to these matters in respect of counts 1.1, 1.2 and 1.3.
The defendant did not give evidence at the trial. Mr Crocker referred me to the decision of the High Court in Azzopardi v The Queen (2001) 205 CLR 50 where the majority dealt with the appropriate direction to be given to a jury where the defendant does not give evidence at the trial. Their Honours said (at [51]):
In the course of argument of the present matters it was suggested that if a judge said nothing to the jury about the fact that an accused had not given evidence, the jury may use the accused’s silence in court to his or her detriment. Plainly that is so. It follows that if an accused does not give evidence at trial it will almost always be desirable for the judge to warn the jury that the accused’s silence in court is not evidence against the accused, does not constitute an admission by the accused, may not be used to fill gaps in the evidence tendered by the prosecution, and may not be used as a make-weight in assessing whether the prosecution has proved its case beyond reasonable doubt. . . . .
[T]here may be cases where the failure of an accused to offer an explanation by reference to some matter peculiarly within his or her knowledge will permit comment to be made as to that failure.
I take those comments into account in my capacity as both judge and jury in respect of these proceedings. Nevertheless, where the defendant chooses not to give evidence and does not call evidence disputing the evidence adduced by the plaintiff in relation to the defendant’s conduct and statements, that aspect of the plaintiff’s case remains uncontradicted: R v Collie (2005) 91 SASR 339 at 356-7; R v Porter (2003) 85 SASR 581 at 589-592.
As the Court of Criminal Appeal took pains to say in Collie, it is not appropriate to direct a jury that because the defendant does not give evidence, the evidence adduced by the prosecution is more readily acceptable, but it is legitimate to make reference to the fact that thereby some of the evidence of the prosecution case remains uncontradicted. All of the prosecution evidence has to be examined carefully so that a proper determination may be made as to the use to which the evidence may be put. To say that some of the prosecution evidence remains uncontradicted means no more than that in examining those aspects of the prosecution case, the jury does not have the complication of having to weigh evidence adduced by the defence which contradicts some aspects of the prosecution case. (See Collie paras [52-56]).
The Torrensville Property – Count 1.1
In about August or September 2005 Mrs Balalis made an approach to a Mr Lloyd seeking short term finance. He was called as a witness. He stated that he approached Mr Loffler who conducted the business called LoanCo. Mr Lloyd referred to a loan application to LoanCo being completed in his presence by the defendant and his wife.
The defendant attacked the credibility of Mr Lloyd. The defendant tendered a document entitled Enforceable Undertaking prepared by ASIC which became exhibit D53. The document referred to Mr Lloyd as the holder of a proper authority from Professional Investment Services Pty Ltd (a licensed dealer in securities) from March 1995 to February 2002. The document referred to a complaint to ASIC from one of Mr Lloyd’s clients.
Paragraph 2 of Exhibit D53 expresses the concerns of ASIC that he may have contravened provisions of the Corporations Law and other matters. Those concerns were acknowledged by Mr Lloyd who gave a certain undertakings recorded in the document.
Some of the concerns of ASIC involved alleged misrepresentations and allegations of the withholding of monies without authority and of being in a position of conflict without disclosing it to the client. It was also alleged that ASIC had reason to believe that Mr Lloyd had not in the past and would not in the future perform his duties sufficiently, honestly and fairly. The defendant submitted that, in light of that past history, Mr Lloyd could not be regarded as a witness of truth. I reject that submission. The essentials of the evidence given by Mr Lloyd which support my findings in relation to the charges are all corroborated by documentation signed by the defendant. In addition the enforceable undertaking does not constitute an admission of dishonest conduct on the part of Mr Lloyd. It is clearly a procedure which may be invoked by ASIC in lieu of prosecuting a person for suspected breaches of the Corporations Act, but of itself does not purport to be a proof of the conduct in respect of which ASIC had the concerns expressed in paragraph 2 of the document.
The defendant also called a Ms Bird, a handwriting expert, who examined original documentation relating to both counts 1.2 and 1.3. These included exhibits R47 – R49, R51 and R52. Ms Bird gave evidence that certain signatures appearing on exhibits R47, R48, R51 and R52 were the signatures of the defendant. She was unable to offer an opinion one way or the other as to whether or not a signature attributed to the defendant on exhibit R49 was in fact his signature. R49 was the memorandum of mortgage signed in relation to the loan secured by the Renaissance Properties. In my opinion Ms Bird’s evidence does not detract from the cogency of Mr Lloyd’s evidence.
Mr Loffler, who gave evidence, referred the application to a Mr Prinz who conducted the business of a lender through a company called Finance Co Pty Ltd. He agreed to lend to the defendant and Mrs Balalis the sum of $52,000 for a period of 6 weeks at an interest rate of 7% per month. Mr Loffler remained involved because he instructed conveyancers to prepare the necessary documentation. A loan agreement (exhibit R42) was prepared and after some shuffling of papers, a signed copy dated 10 September 2005, was obtained. The loan agreement and other documentation was forwarded to conveyancers by Mr Loffler.
The conveyancers then prepared a caveat which was subsequently lodged on the title to the Torrensville property claiming:
An estate as an equitable mortgagee pursuant to a certain agreement dated the 10^th day of September 2005 between the caveator and the caveatee agreed to mortgage the said land above described in favour of the caveator . . . . .
The final form of the agreement is exhibit R55.   Clause 8 of the loan agreement is as follows:
8.     Security
8.1     The borrower will contemporaneously with this agreement give to (or procure for) the lender the following security for the loan:
8.1.1 Mortgage
A second registered mortgage and/or caveat in the form required by the lender or its solicitors over the property/s described in the Seventh Schedule . . . .
8.2     The lender may if it wishes to lodge a caveat over the Certificate(s) of Title for the security property to protect its right under the mortgage and may arrange with the first registered mortgagee of the house for registration of the mortgage without any interference or objection from the borrower.
No other security document was prepared. However, the agreement by the borrowers in Clause 8 to provide a mortgage constituted a charge on the property because in equity, resort may be had to the property as security for the loan even if the borrower subsequently refuses to sign the necessary documents constituting either an unregistered or a registered mortgage. In that sense, the defendant, by Clause 8 of the Loan Agreement offered and provided the relevant property as security for the loan.
I am satisfied that the plaintiff has established, beyond reasonable doubt, that the defendant, as one of the registered proprietors of the property at 50A Clifford Street Torrensville, agreed on about the 10 September 2005 to borrow the sum of $52,000 from Finance Co Pty Ltd and that he offered and provided to the lender, as security for the loan, a charge which arose by virtue of clause 8 of the loan agreement, the claim to which was noted in a caveat lodged in respect of the relevant land. These findings constitute the actus reus of count 1.1.
The Renaissance Arcade Property – Count 1.2
In November 2005 Mr Lloyd, at the request of Mrs Balalis, contacted Mr Lloyd seeking a further loan, initially in the sum of $150,000 but subsequently changed to $200,000. As a result, a loan agreement (exhibit R47), a mortgage (exhibit R49) and a personal guarantee (exhibit R48) were prepared by the conveyancers.
When Mrs Balalis advised Mr Lloyd of the need for a loan, he contacted Mr Loffler who in turn contacted clients of his, Mr Mitrovic and a Mr Sudari. They were the lenders named in the loan agreement (Exhibit R47).
Once the documentation had been prepared, Mr Lloyd took the loan agreement, mortgage and personal guarantee to Mr and Mrs Balalis at their office in Light Square. It was from these premises they conducted a catering business. Mr and Mrs Balalis each signed each of the three documents in the presence of Mr Lloyd. This was done on either the 24 or 25 November 2005. The evidence of the handwriting expert, Ms Bird, supports Mr Lloyd’s evidence about the defendant’s signature being placed on those documents she examined, apart from the mortgage (exhibit R49). For the reasons stated earlier I accept his evidence that the defendant signed the mortgage (exhibit R49) on about 24 or 25 November 2005.
As to count 1.2, I find that J.M. Properties Pty Ltd, between 25 and 29 November 2005, by its directors, agreed to borrow the sum of $200,000 from Ralph Mitrovic and Giuseppe Sidari and offered and provided to the lenders as security for the loan the unregistered mortgage the claim to which was noted in the caveat lodged on the titles to units 4, 5 and 6 of the Renaissance Arcade. The count in paragraph 1.2 also refers to a personal guarantee but the provision of a guarantee, in my opinion, does not constitute a breach of the order of the 15 August 2005.
The Port Elliot property – count 1.3
Shortly before Christmas 2005 Mrs Balalis contacted Mr Lloyd and indicated a need to borrow an additional $50,000. Mr Lloyd contacted Mr Loffler who in turn made enquiries of Mr Sudari. According to Mr Lloyd, additional security was required. It is not clear whether the defendant advised that the Port Elliot property would be provided as additional security. It may have been Mrs Balalis but in any event documentation was prepared on that assumption by the conveyancers. The conveyancers prepared an addendum to loan agreement (exhibit R51) and an acknowledgement by guarantors (exhibit R52). Mr Lloyd collected these documents and took them to the Light Square office where, in his presence the defendant and Mrs Balalis signed each of the documents.
As to count 1.3, I find that J. M. Properties Pty Ltd, on about the 22 December 2005, by its directors, agreed to vary the loan agreement referred to in count 1.2 by borrowing an additional sum of $50,000, offering and providing to the lenders additional security the claim to which was recorded in caveat noted on the title to unit 3, 8 Railway Terrace, Port Elliot. Count 1.3 also refers to the extension to the defendant’s personal guarantee but this, in my view, could not constitute a breach by the defendant of the order of the 15 August 2005.
The mental element of the charges
The remaining matter to be considered is what the plaintiff has to establish in relation to the mental element of the charges. It was submitted by the plaintiff that all that needed to be proved was that the defendant intended to perform the act which constituted the breach. In other words it was not necessary to prove that he intended to breach the injunction. The defendant’s case was that the plaintiff had to establish a contumacious breach of the order. By this I take him to mean that it must be established that not only must the defendant be shown to have intended to perform the act which constituted the breach, but also it must be established that he intended to breach the order. In my opinion the law in Australia is as stated by the High Court in Witham v Holloway (1995) 183 CLR 525. That case is authority for the proposition that the plaintiff need only establish that the defendant intended to perform the acts which constituted the breach. It is not necessary to prove that the defendant also intended to breach the injunction: per McHugh J at 541; see also AMIEU v Mudginberri Station Pty Ltd (1986) 161 CLR 98.
A number of the cases are to the effect that if the breaches were casual, accidental or unintentional, that is not sufficient: AMIEU v Mudginberri Station Pty Ltd (supra at 113). In my opinion, the defendants’ conduct in relation to counts 1.1, 1.2 and 1.3 could not be said to be casual, accidental or unintentional. The clear inference may be drawn that he intended to sign the various documents, in particular the respective loan agreements and the mortgage, with the deliberate intention, in the case of count 1.1, of committing himself to the requirements of the loan agreement, and in the case of counts 1.2 and 1.3, committing the company to the respective requirements of the loan agreement and mortgage.
For the reasons stated earlier, there will be verdicts of acquittal in relation to counts 1.1, 1.2 and 1.3. I will hear the parties as to costs.