Scott v Evia Pty Ltd - [2007] VSC 15

Do Not Send for Reporting
IN THE SUPREME COURT OF VICTORIA		Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 2010 of 2006

ALAN GEOFFREY SCOTT AND ORS	Plaintiffs
v
EVIA PTY LTD (ACN 086 082 082) AND OTHERS	Defendants

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JUDGE:	DODDS-STREETON J
WHERE HELD:	Melbourne
DATE OF HEARING:	9, 10, 11, 20 & 24 October 2006, 8 November 2006 & 8 February 2007.
DATE OF JUDGMENT:	9 February 2007
CASE MAY BE CITED AS:	Scott v Evia
MEDIUM NEUTRAL CITATION:	[2007] VSC 15

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CONTEMPT OF COURT – Relevant principles – Alleged breach of two orders – Defendants change locks, enter premises and remove assets and vehicles in possession of receivers – Alleged sale of some vehicles and assets to third party - Plea of guilty to contempt of first order – Whether wilful – First order not endorsed in accordance with r.66.10(3) of Supreme Court Rules – Whether fine may or should be imposed – Second order endorsed in accordance with r.66.10(3) - Contempt of second order denied – Defendants deny service of second order.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr R. Garratt QC	Middletons
For the Defendants	Mr P. Collinson SC	Oakley Thompson & Co

TABLE OF CONTENTS

INTRODUCTION AND SUMMARY OF ISSUES...................................................................... 1

CONTEMPT – RELEVANT LEGAL PRINCIPLES..................................................................... 7

All contempts to be proved beyond reasonable doubt........................................................... 7
Essential elements of contempt................................................................................................... 9
Liability does not require wilful disobedience....................................................................... 10
Endorsement pursuant to r.66.10(3)......................................................................................... 14
Strict proof of service generally required................................................................................ 15
Whether fine precluded if no endorsement............................................................................ 16

BACKGROUND AND SUMMARY OF EVIDENCE............................................................... 19

CONTEMPT OF 4 APRIL 2006 ORDER...................................................................................... 26

The 4 April 2006 order................................................................................................................ 26
Events of 2 May 2006.................................................................................................................. 32
Contempt of 4 April 2006 order and whether fine may be imposed................................... 38
Factors relevant to penalty......................................................................................................... 39
Whether fine warranted............................................................................................................. 40

WHETHER CONTEMPT OF 5 MAY 2006 ORDER.................................................................. 48

The 5 May 2006 order................................................................................................................. 49
Sale to Booze2U........................................................................................................................... 50
Whether 5 May 2006 order served............................................................................................ 62

Service on 2 May 2006............................................................................................................ 62
Service on 2 August 2006........................................................................................................ 77

Credit of witnesses...................................................................................................................... 80
Conclusion on service on 9 May 2006...................................................................................... 82
Conclusion on service on 2 August 2006................................................................................. 83
Conclusion on contempt of 5 May 2006 order........................................................................ 83

HER HONOUR:

INTRODUCTION AND SUMMARY OF ISSUES

By a summons filed 22 May 2006 (“the contempt summons”), the first and second plaintiffs, Messrs Allan Scott and Mathew Muldoon of Sims Partners, (collectively “the receivers”), the third plaintiff, Asset Management Solutions Pty Ltd (Receivers and Manager Appointed) (“AMS”), the fourth plaintiff, Commonwealth Bank of Australia (“CBA”) and the fifth plaintiff, CBFC Limited (“CBFC”), seek orders that the second defendant, Haritopoulos Pty Ltd (“Haritopoulos”) and its director, the third defendant, Mr Pantelis Charitopoulos (collectively, “the defendants”), be adjudged guilty of, and punished for, contempt of court, constituted by breaches of the orders made by Whelan J on 4 April 2006 (“the 4 April 2006 order”) and 5 May 2006 (“the 5 May 2006 order”).

The contempt charges arise from a dispute between the receivers and Mr Charitopoulos over the possession of assets and premises. The background to the dispute is complex and is set out in detail below. In summary, in August 2005 CBFC appointed Messrs Muldoon and Scott receivers of AMS and Golden Chef Australia Pty Ltd (Receivers and Managers Appointed) (“GCA”), companies in a group controlled by Pantelis Charitopoulos. Initially, the receivers and charge holders granted a licence permitting the Charitopoulos family companies to use the assets of AMS and GCA and to occupy premises situated at Athol Park, South Australia (“the Athol Park premises”), which were leased to GCA by Haritopoulos (another group company), in the group’s ongoing business. Following defaults in payments due under the licence agreement, the parties entered a deed of agreement in December 2005, which required, inter alia, the CBA and CBFC facilities to be refinanced.

In January 2006 following further defaults in payment, the receivers terminated the licence and took possession of the assets, which were held at the Athol Park premises. The receivers claimed to be entitled to possession of the Athol Park premises until 30 March 2006 pursuant to the deed of agreement.

Mr Pantelis Charitopoulos asserted that arrears of rent for the Athol Park premises were owed to Haritopoulos, which was therefore entitled to distrain for rent. On 7 March 2006, he caused the locks of the Athol Park premises to be changed and took possession of the premises and the assets in them.

The plaintiffs disputed Haritopoulos’ actions and claims. They consequently issued the present proceeding seeking, inter alia, injunctive relief to regain possession of the Athol Park premises and the assets held there.

Whelan J made the 4 April 2006 order, which provided that the defendants must permit the receivers to remain in possession of the Athol Park premises and of the assets in the premises until 4.30 pm on 5 May 2006.

Consequent upon the 4 April 2006 order, the receivers resumed possession of the Athol Park premises and of the assets in the premises.

On 2 May 2006, the defendants again changed the locks, re-entered the Athol Park premises and removed a number of assets, including over 20 vehicles. The receivers repossessed about a dozen vehicles over the course of the following days, but eight vehicles and certain other assets have not been recovered.

The plaintiffs allege that on 2 May 2006, the defendants breached, and committed contempts of, the 4 April 2006 order by:

(a)causing the locks of the Athol Park premises to be picked and changed and re‑entering and taking possession of the Athol Park premises, thus excluding the receivers.
(b)removing (or causing to be removed) assets, including books, records, plant and equipment and 21 motor vehicles from the Athol Park premises.

Following the events of 2 May 2006, Whelan J made the 5 May 2006 order, which provided that the defendants must, within 72 hours of service of the order, deliver up all the assets which they had removed from the Athol Park premises to the plaintiffs. It further provided that the defendants must, in the case of any vehicles specified in a schedule which were not delivered up, file and serve affidavits deposing to their knowledge of the precise whereabouts of the vehicles, the person or persons having possession or control, and how that person or persons acquired such possession or control.

The plaintiffs allege that the 5 May 2006 order was served on Haritopoulos at its registered office at 2.55 pm on 5 May 2006 and on Mr Charitopoulos at 3.15 pm on 9 May 2006. They allege that Haritopoulos and Mr Charitopoulos breached, and committed contempts of, the 5 May 2006 order by:

(a)failing to deliver to the plaintiffs the assets removed on 2 May 2006 from the Athol Park premises within 72 hours of service; and
(b)failing to file and serve the affidavits required within 72 hours of service in relation to any specified vehicles not delivered to the plaintiffs.

The plaintiffs further allege that the contempts were committed in wilful and deliberate disregard of the 4 April 2006 order and the 5 May 2006 order.

By an amended summons filed with leave granted on 9 October 2006 (“the amended summons”), the plaintiffs further or alternatively allege that the 5 May 2006 order was served on Mr Charitopoulos on 2 August 2006.

The plaintiffs seek that Haritopoulos be punished by a fine, or sequestration of its property, or both, and that Mr Charitopoulos be punished by a fine and committal to prison.

The defendants admit, and plead to, the charges of contempt of the 4 April 2006 order, but contend that the contempt was neither wilful (in the sense of a deliberate defiance of the order) nor contumacious. They further contend that both because the breach was not deliberate and because the 4 April 2006 order did not contain an endorsement in accordance with r.66.10(3) of the Supreme Court (General Civil Procedure) Rules 1996 (“Supreme Court Rules”), imprisonment is not an available penalty and, on the better view, a fine is also inappropriate. The plaintiffs concede that the 4 April 2006 order did not include the relevant endorsement and imprisonment is therefore precluded. They argue, however, that the Court is empowered to impose a fine and should do so in the circumstances.

The 5 May 2006 order contains an endorsement in accordance with r.66.10(3). The defendants deny the charges of contempt of the 5 May 2006 order, on the ground that the 5 May 2006 order has never been served on Mr Charitopoulos. They also contend that service on Haritopoulos at its registered office was ineffective because, in the absence of service on Mr Charitopoulos, it did not comply with r.66.10.(1)(a) of the Supreme Court Rules.

There is a fundamental conflict of evidence about the alleged service of the 5 May 2006 order on Mr Charitopoulos. The plaintiffs contend that the 5 May 2006 order was first served on Mr Charitopoulos on 9 May 2006 and that it was served again on 2 August 2006. A witness for the plaintiffs, Mr William Eglinton (supported by the evidence of Mr Jason Heidt and Mr James Codling), contends that he served Mr Charitopoulos with the 5 May 2006 order on the afternoon of 9 May 2006 in Pirie Street, Adelaide, and that, on 10 May 2006, Mr Charitopoulos implicitly acknowledged such service when Mr Eglinton asked him, “Are you Pantelis Charitopoulos today?” by responding, “yes and I was Pantelis Charitopoulos yesterday”. Mr Charitopoulos denies that he was served with the 5 May 2006 order on 9 May 2006. He contends that Mr Eglinton mistook a business associate, Mr Archie Koimtsidis, for Mr Charitopoulos and, due to mistaken identity, “served” the 5 May 2006 order on Mr Koimtsidis. It is not disputed that immediately after the alleged service of the 5 May 2006 order on 9 May 2006, Mr Koimtsidis, accompanied by Mr Charitopoulos, took the documents to the nearby offices of Mr Charitopoulos’ solicitors, McNamara Business and Property Lawyers (“McNamara Lawyers”), stated that they had been dropped at his feet and sought advice. Mr McNamara of McNamara Lawyers advised that the documents should be returned to the plaintiffs’ solicitors, Middletons. McNamara Lawyers then returned the documents to Middletons.

Mr Charitopoulos also disputes that on 10 May 2006 he implicitly acknowledged that he had been served with the 5 May 2006 order on 9 May 2006. He contends that in response to Mr Eglinton’s question, “Are you Pantelis Charitopoulos today?”, he responded, “I am Pantelis Charitopoulos every day”.

The plaintiffs also contend that because Mr Charitopoulos disputed the alleged service on 9 May 2006, Mr Eglinton served the 5 May 2006 order on him again at his residence on the morning of 2 August 2006, and, on the same occasion, also handed him a separate bundle of documents directed to Mr Charitopoulos’ father, Mr George Charitopoulos. According to Mr Eglinton, the two bundles of documents were separate and neither bundle of documents handed to Mr Charitopoulos on 2 August 2006 was contained in an envelope. Mr Charitopoulos disputes that he was served with the 5 May 2006 order on 2 August 2006. He initially contended that he was served only with documents contained in an envelope which he did not open, but immediately took to his solicitor, Mr McNamara, who returned it to Middletons. It is not disputed that the bundle of documents returned by Mr McNamara to Middletons was not in an envelope. The bundle consisted of a number of documents which were stapled together. The documents were directed to George Charitopoulos, save for a copy of the 5 May 2006 order imprinted with a blue stamp, which was included at the end of the stapled bundle.

At the hearing, Mr Charitopoulos was no longer certain that the documents Mr Eglinton handed to him on 2 August 2006 were contained in an envelope, but he contended that he was given only one bundle of documents addressed to George Charitopoulos, which he did not look at, but immediately conveyed to McNamara Lawyers. The defendants thus contend that the 5 May 2006 order, (if handed to Mr Charitopoulos at all on 2 August 2006), was merely included as an undisclosed annexure to the bundle of documents addressed to George Charitopoulos. They deny that Mr Eglinton advised Mr Charitopoulos that he was handing him an order directed to him and contend that, in such circumstances, the 5 May 2006 order was not effectively served on 2 August 2006.

The 5 May 2006 order requires the defendants, within 72 hours of service, to deliver up to the plaintiffs the items removed from the Athol Park premises, or, in the case of the vehicles listed in the attached schedule which were not delivered up, to file and serve affidavits setting out their knowledge of the precise whereabouts of the vehicles, the persons in possession or control of them and how they acquired such possession or control.

It is not disputed that the defendants neither delivered up any items removed from the Athol Park premises on 2 May 2006, nor filed affidavits deposing to their knowledge of the specified vehicles’ whereabouts and the persons in possession, within 72 hours of the alleged service on 9 May 2006 or 2 August 2006.

It follows that if service were effected on Mr Charitopoulos on either 9 May 2006 or 2 August 2006, he breached the 5 May 2006 order. Similarly, if Haritopoulos were effectively served on 5 May 2006, it breached the 5 May 2006 order.

The contempt summons issued on 22 May 2006 was fixed for hearing on 28 August 2006. By that date, the plaintiffs had recovered about a dozen of the vehicles which had been removed from the Athol Park premises on 2 May 2006, but eight vehicles and other items remained outstanding. On 28 August 2006, the defendants successfully sought an adjournment to 5 September 2006 and undertook to file and serve affidavits as to the whereabouts and control of the outstanding assets on or before 30 August 2006. In their affidavits filed on 30 August 2006, they deposed that eight vehicles and other items were in the possession of Booze2U Pty Ltd (“Booze2U”), a company which had purchased them from Haritopoulos pursuant to a sales agreement made on 4 May 2006.

The defendants’ affidavits of 30 August 2006 would not, on any view, vitiate the breach of the 5 May 2006 order if it were served on Mr Charitopoulos either on 9 May 2006 or 2 August 2006, or on Haritopoulos on 5 May 2006, because the 5 May 2006 order required delivery of the assets and the filing and serving of affidavits (in relation to specified assets not delivered up) within 72 hours of service. The defendants, however, while denying service of the 5 May 2006 order, rely on the validity of the sale to Booze2U in order to establish their compliance, to the greatest extent possible, with the 5 May 2006 order. That is, they contend that the outstanding vehicles and items are beyond their control due to a bona fide sale to a third party, and that they have now satisfactorily deposed. (albeit belatedly), to the assets’ whereabouts, the possessor’s identity and how it obtained possession or control, as required by the 5 May 2006 order.

The plaintiffs contend that the alleged sale to Booze2U is ineffective by reason of the principle nemo dat quod non habet, and, is in any event, a sham. They contend that it constitutes no impediment to the defendants’ ability to return the outstanding vehicles and items. They argue that therefore, the defendants’ affidavits sworn on 30 August 2006 do not constitute bona fide compliance, to the greatest extent possible, with the 5 May 2006 order. They submit that, in the circumstances, a term of imprisonment should be imposed on Mr Charitopoulos for breach of the 5 May 2006 order.

CONTEMPT – RELEVANT LEGAL PRINCIPLES
All contempts to be proved beyond reasonable doubt

The failure to comply with an injunction in a civil proceeding is a civil contempt.

Traditionally, a clear distinction was drawn between criminal and civil contempt. In Witham v Holloway,[1] the High Court allowed an appeal against an order committing the appellant to prison for one month for contempt of court, constituted by breach of a Mareva injunction which required him to swear and file an affidavit disclosing details of his property and restraining him from dealing with it beyond a permitted value.
[1] (1995) 183 CLR 525.

At first instance, the trial judge held that, as it was a wholly civil contempt, the civil standard of proof applied, albeit the required degree of satisfaction could vary according to the gravity of the facts to be proved. Brennan, Deane, Toohey and Gaudron JJ, in their joint judgment, proceeded on the basis that the trial judge made the finding of breach of the Mareva injunction on the balance of probabilities. Their Honours considered that, even in cases of civil contempt, the elements should have been proved beyond reasonable doubt.[2]
[2](1995) 183 CLR 525 at 529.

They acknowledged that the distinction between civil and criminal contempt, although longstanding, was illusory in significant respects, and did not “justify the allocation of different standards of proof for civil and criminal contempt.”[3]
[3]At 534.

Brennan, Deane, Toohey and Gaudron JJ described the traditional distinction thus:

“In general terms, the distinction between civil and criminal contempt is that a civil contempt involves disobedience of a court order or breach of an undertaking in civil proceedings, whereas a criminal contempt is committed either when there is a contempt in the face of the court or there is an interference with the course of justice. However, disobedience or breach of an undertaking amounts to a criminal contempt if it involves deliberate defiance or, as it is sometimes said, if it is contumacious.”[4]

[4]At 530.

They acknowledged the distinction traditionally drawn between the primary aims of civil contempt (to compel obedience in the interest of the private individual) and criminal contempt (to vindicate judicial authority and maintain the integrity of the judicial process in the public interest)[5]. They considered, however, that that dichotomy was also false, because the functions allocated to each category of contempt necessarily overlapped, and the positive and remedial objects of each category were “inextricably intermixed”.[6] Their Honours concluded that the illusory nature of the differences, and the fact that the usual outcome of successful contempt proceedings was punishment “make it clear, as Deane J said in Hinch,[7] that all proceedings for contempt ‘must be seen as criminal in nature’. The consequence is that all charges of contempt must be proved beyond reasonable doubt.”[8]
[5]At 531.
[6]At 534.
[7]Hinch v Attorney-General (Vic) (Derryn Hinch Case) (1987) 164 CLR 15.
[8](1995) 183 CLR 525 at 534.

In Louis Vuitton Malletier South Australia v Design Elegance Pty Ltd, Merkel J stated:

“Witham did not go so far as to decide that the distinction between civil and criminal contempt no longer existed, although McHugh J observed (at 549) that the case for abolishing the distinction between civil and criminal contempt is a strong one.”[9]

[9](2006) 149 FCR 494 at [38].

Merkel J again acknowledged in Australian Prudential Regulation Authority v Siminton (No. 2), that “the distinction between civil and criminal contempt has lost much of its significance”.[10] His Honour recognised, however, that the distinction might be relevant to penalty. A contempt involving deliberate defiance would be criminal, and “disguised steps calculated to defeat … the purpose” of a Court order, could render it particularly serious.[11]
[10][2006] FCA 397 at [10].
[11]At [10].

It follows that all contempts arising from a breach of a Court order are essentially criminal in nature. All such contempts require proof of the elements beyond reasonable doubt, may involve punishment and uphold the public interest by vindicating the Court’s authority.

Essential elements of contempt

In Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd,[12] (“Advan”) Gillard J identified the elements which the plaintiff must establish in a charge of contempt as follows:

“(1)That an order was made by the Court.
(2)That the terms of the order are clear, unambiguous and capable of compliance.
(3)That the order was served on the alleged contemnor or excused in the circumstances, or service dispensed with pursuant to the Rules of Court.
(4)That the alleged contemner has knowledge of the terms of the order.
(5)That the alleged contemnor has breached the terms of the order.”[13]
[12][2003] VSC 201.
[13]At [31].

(His Honour added that the plaintiff must prove that the act or omission constituting the breach was deliberate and voluntary.)
Liability does not require wilful disobedience

In Advan, Gillard J considered that a casual or accidental and unintentional breach of an order would not constitute a defence to a charge of contempt.

His Honour stated that:

“it would not be a defence to a contempt proceeding to show that the disobedience came about by some casual or accidental and unintentional act. Putting it around the other way, it is not part of the prosecution's proof once the matter is raised to establish that the breaching act or omission was something that was not casual or accidental and was intentional. However, in my opinion if the evidence revealed that the breach was casual or accidental and unintentional, that would be relevant to whether or not this court should exercise its contempt jurisdiction and, on any view, is relevant to the question of penalty if the court comes to the view that it should exercise the jurisdiction.”[14]

[14]At [45].

He accepted that an intention to disobey the order was unnecessary.

Gillard J referred to Re Perkins[15] and Davis v Bailey[16], in which it was acknowledged that the Court might exercise its discretion to decline to convict, notwithstanding that it was satisfied that a contempt had been committed. He concluded that the Court could, in its discretion, decline to exercise its contempt jurisdiction if the charge were trivial, minor or lacked substance.
[15](1998) 4 VR 505 at 512-3.
[16][1946] VLR 486 at 493-4.

The authorities therefore establish that it is generally unnecessary to prove that the contemnor committed the breach with an intention to disobey. If, however, the disobedience were “casual or accidental and unintentional” as distinct from “deliberate and voluntary”, then although it would prima facie give rise to liability, the Court might nevertheless decline to exercise the contempt jurisdiction. If it did exercise the jurisdiction, the casual or accidental and unintentional nature of the breach would be relevant to whether a penalty should be imposed, and if so, what it should be.

In AMIEU v Mudginberri Station Pty Ltd[17], the High Court considered the nature of wilful and contumacious contempt. In that case, the Federal Court had granted an interlocutory injunction restraining the appellant union from imposing or maintaining bans on the respondent meat exporter, with which it was in dispute. The union breached the order by continuing to approve a picket line. The Federal Court consequently imposed fines. The secretary of the appellant announced publicly that the union would not pay the fine. Morling J found that the union had engaged in a course of public defiance of the order and ordered that a writ of sequestration should issue.
[17](1986) 161 CLR 98.

The Full Court of the Federal Court dismissed the union’s appeal. The High Court also dismissed its appeal. Gibbs CJ, Mason, Wilson and Deane JJ, in a joint judgment, noted the historical distinction between the objects of civil and criminal contempt, but recognised that increased scrutiny of its theoretical basis had exposed its artificiality. They considered that “Salmon LJ was right when he said in Jennison v Baker, at p 64, speaking with reference to the enforcement of an injunction generally, that “(t)he two objects are, in my view, inextricably intermixed.”[18]
[18]At 108.

Their Honours stated that in cases of disobedience accompanied by public defiance, the primary purpose could be readily seen to be the vindication of the Court’s authority, whereas when the disobedience was casual, the primary purpose could readily be seen to be the vindication of the plaintiff’s rights. They observed that:

“ … the classification in terms of primary purpose is a more complex and artificial undertaking when the punishment is for wilful disobedience unaccompanied by defiance.”[19]

[19]At 108.

Although some authority had doubted that there was power to impose a fine for civil contempt, their Honours approved a recent strong stream of English and Australian authority which supported the imposition of fines for disobedience of orders in circumstances where the disobedience was wilful.

While some judges had previously considered that wilful conduct would not constitute contempt unless it were also contumacious, the High Court accepted as correct Stamp J’s imposition of a fine in Steiner Products Ltd v Willy Steiner Ltd,[20] where the conduct did not amount to obstinate disregard, but was simply a case of a failure, for no excuse whatever, to carry out an undertaking.
[20](1966) 1 WSLR 986.

Gibbs CJ, Mason, Wilson and Deane JJ also approved recent decisions which recognised that “any disobedience which was worse than causal, accidental or unintentional must be regarded as wilful”.

They concluded that a “deliberate commission or omission which is in breach of an injunctive order or an undertaking will constitute such wilful disobedience unless it be casual, accidental or unintentional.”[21]
[21](1986) 161 CLR 98 at 113.

They accepted that that it was no answer to proceedings for contempt “to say that the act was not contumacious in the sense that, in doing it, there was no direct intention to disobey the order”.[22] They approved the result in Mileage Conference Group v The Tyre Manufacturers Conference Ltd’s Agreement,[23] in which a substantial fine was imposed “for contempt by breach of an undertaking which was not merely non-contumacious, but was committed reasonably on legal advice”.[24]
[22]At 112.
[23](1966) 1 WLR 1137.
[24](1986) 161 CLR 98 at 112.

AMIEU v Mudginberri Station Pty Ltd established that a penalty may properly be imposed for contempt if the defendant’s breach were wilful, in the sense that it was not casual or accidental and unintentional. A deliberate act or omission in breach of an injunctive order or undertaking would amount to wilful disobedience. It was unnecessary that the defendant directly intended to disobey the order.

Nevertheless, knowing and deliberate disobedience of the order is a factor which will be adverse to the defendant in determining the penalty and it must therefore be proved beyond reasonable doubt. As Nettle J stated in Primelife Corp Ltd v Newpark Pty Ltd (“Primelife”),[25] the practical consequence of applying the principles of sentencing recognised in R v Storey[26] is that the knowing or deliberate refusal to comply with the order must be established beyond reasonable doubt.
[25][2003] VSC 106.
[26][1998] 1 VR 359.

In Primelife, the defendant failed to comply with an order to attend for examination before a Master. Although service of the order was disputed, Nettle J found that service was established beyond reasonable doubt.

His Honour also dismissed other “defences”. He treated the question whether the defendant’s disobedience were wilful “in the sense of a knowing or deliberate refusal to comply with an obligation the nature of which was comprehended”, as relevant not to liability, but to the penalty to be imposed. His Honour recognised that “although there may be no general requirement to adopt the view of the facts most favourable to the contemnor, that is the practical effect of the requirement that there be proof beyond reasonable doubt of the facts which tell against him”.[27]
[27][2003] VSC 106 at [39].

In R v Storey, the Court of Appeal recognised that while a plea in mitigation may involve both facts adverse to the interests of the offender and facts in the offender’s favour, it was inaccurate to state that either party bore an onus in relation to establishing such facts. The Court of Appeal concluded:

“The Judge may not take facts into account in a way that is ADVERSE to the interests of the accused unless those facts have been established beyond reasonable doubt. On the other hand, if there are circumstances which the judge proposes to take into account IN FAVOUR of the accused, it is enough if those circumstances are proved on the balance of probabilities.
We do not accept the submission on behalf of the applicant that the Crown must disprove, beyond reasonable doubt, matters which the judge proposes or is invited to take into account IN FAVOUR of the offender.”[28]

[28][1998] 1 VR 359 at 369.

Accordingly, aggravating factors relevant to the penalty for contempt require proof beyond reasonable doubt. Nettle J’s approach in Primelife was to ask whether there were other hypotheses reasonably open on the facts consistent with a level of culpability no higher than careless or unintentional disobedience.[29]
[29][2003] VSC 106 at [40].

Endorsement pursuant to r.66.10(3)

Rule 66.10(3) of the Supreme Court Rules provides:

“66.10 Service before committal or sequestration
(1)A judgment shall not be enforced by committal or sequestration unless –
(a)a copy of the judgment is served personally on the person bound;
(b)if the judgment requires the person bound to do an act within a fixed time, the copy of the judgment is so served a reasonable time before that time expires.

(2)Where the person bound is a corporation, the judgment shall not be enforced by committal of an officer of the corporation or by sequestration of the property of an officer of the corporation unless, in addition to service under paragraph (1) on the corporation –
(a)a copy of the judgment is served personally on the officer; and
(b)if the judgment requires the corporation to do an act within a fixed time, the copy of the judgment is so served a reasonable time before that time expires.

(3)A copy of a judgment served under this Rule shall be endorsed with a notice, naming the person served, 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; or
(b)where the judgment requires the person bound to abstain from doing an act, the person disobeys the judgment.

(4)Where a judgment requires the person bound to do an act and an order is made under Rule 59.03 fixing a time within which the act is to be done, a copy of the judgment, endorsed as required by paragraph (3)(a), and a copy of the order shall be served on that person a reasonable time before the expiry of that time.
(5)A judgment requiring a person to do an act within a fixed time or a judgment requiring a person to abstain from doing an act may be enforced under Rule 66.05 notwithstanding that service has not been effected under this Rule if the person against whom the judgment is to be enforced has notice of the judgment –
(a)by being present when the judgment was given; or
(b)by being notified of the terms of the judgment whether by telephone, telegram or otherwise.

(6)The Court may dispense with service under this Rule.”

Strict proof of service generally required

In Clifford v Middleton,[30] the plaintiff applied for leave to issue a writ of attachment against the defendant in circumstances where there was no evidence of service on the defendant of a copy of the order endorsed with the requisite memorandum, save for an affidavit of service filed without leave while the hearing was in progress.
[30](1974) VR 737.

The defendant, however, admitted in cross-examination that he had received a copy of the order. He had not been served with an affidavit of service of the order.

The plaintiff contended that strict proof of service of the order to be enforced was not essential to found jurisdiction for attachment and that failure to serve an affidavit of service was, at most, a mere irregularity. Further, the plaintiff argued that if it could be shown that the order which had not been obeyed had come to the knowledge of the party to be attached, service of the order was not required.

Kaye J held that personal service was necessary to found jurisdiction. His Honour stated:

“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 … 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 Order 41, Rule 5. 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.”[31]

[31]At 739.

His Honour was not satisfied that the defendant had been served with a true copy of the order duly endorsed with the requisite memorandum.

While his Honour apparently accepted that, in some circumstances, an irregularity may be condoned or overcome by a consensual departure from the ordinary rules of procedure, he observed:

“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.”[32]
[32]At 741.

Kaye J’s observations suggest that imprisonment or a fine could be imposed in the absence of an endorsement in accordance with r.66.10(3) if it could be established that the defendant had received an effective warning by some other means.
Whether fine precluded if no endorsement

In Primelife,[33] the order served on the defendant was not endorsed in accordance with r.66.10(3). Unless the requirements of r.66.10(3) were dispensed with, the defendant could not be committed or dealt with by sequestration.
[33][2003] VSC 106.

Nettle J declined to dispense with the requirement, following the approach of Kaye J in Clifford v Middleton. He considered, however, that the Court had power to impose a fine although the order was not endorsed in accordance with r.66.10(3). He observed that the rule did not refer to “fines”, and the sanctions of committal and fines were apparently used in contradistinction in r.75.11 of the Supreme Court Rules. His Honour considered that he should, however, follow the approach adopted in New South Wales and stated:

“With some diffidence I conclude that there is power to fine even if an order has not been indorsed in accordance with the rule.”[34]

[34]At [35].

Nettle J stated that it was:

“clear that the Court should not impose a fine save in a case of wilful contempt, and even then, not unless the requirements of specific and general deterrence warrant the adoption of that course.”[35]

[35]At [37].

His Honour was not satisfied beyond reasonable doubt that the defendant’s failure to comply with the order was wilful, in the sense of a knowing and deliberate refusal to comply with an obligation the nature of which was comprehended. He also considered that, given the defendant’s arrest and the manner in which he was dealt with on arrest, the defendant had been punished enough and had learnt his lesson.

In Miller v Eurovox Pty Ltd,[36] the Court of Appeal allowed an appeal against an order that the appellants be imprisoned for contempt, in circumstances where the endorsement required by r.66.10(3) was not on the served copy. The absence of the endorsement had not been brought to the attention of the trial judge.
[36][2004] VSCA 211.

Vincent JA, with whom Batt and Buchanan JJA agreed, stated:

“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 emphasise 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.[37]
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.”[38]

[37]At [30].

[38]At [31].

His Honour endorsed the approach of Kaye J in Clifford v Middeton. He concluded that there was no material before the Court to support an inference beyond reasonable doubt that (in the absence of the endorsement) the appellants knew or understood the consequences of breaching the Mareva order. Therefore, the failure to comply with the Rules could not properly be regarded as inconsequential,[39] and the sentence of imprisonment was not allowed to stand.
[39]At [35].

Vincent JA acknowledged force in the argument that the absence of the endorsement precluded a fine and recognised concerns about possible unfairness. He concluded, however, that the Court was empowered to impose a fine in the absence of the endorsement. His Honour stated:

“It is apparent, in my view, that a clear distinction is made in the Rules between the penalties of committal and sequestration on the one hand, and the imposition of a fine on the other. Order 66.10 is applicable only to the enforcement of orders by sequestration or committal. Under Order 75.11 contempt may be punished, in the case of a natural person, by committal to prison or a fine or both. It does not seem to me that the absence of the endorsement required, if the order is to be enforced by possible imprisonment, would remove the power of the Court to impose a fine.”[40]
[40]At [38].

BACKGROUND AND SUMMARY OF EVIDENCE

The receivers, Messrs Scott and Muldoon, sue in their capacity as receivers and managers appointed over the assets and undertakings of three corporations, AMS, CGA and Golden Chef (Vic) Pty Ltd (Receivers and Managers Appointed) (“GCV”). Messrs Scott and Muldoon were appointed receivers and managers by CBA and CBFC.

AMS, GCA, GCV, the first defendant, Evia Pty Ltd (“Evia”) and Haritopoulos are all companies within the Golden Chef group of Companies. The Golden Chef group comprises approximately 19 companies which conducted a mobile catering business. The mobile catering business was commenced on a modest scale during the 1970s by the sixth defendant, Rosa Charitopoulos, and her husband, the seventh defendant, George Charitopoulos.

The third defendant, Mr Pantelis Charitopoulos is currently aged 27. He is the son of Rosa and George Charitopoulos. He has been involved in the Golden Chef business in various capacities since his childhood. He completed several years of a university accounting course, but left to work in the Golden Chef business. He became a fulltime employee in 1998. From 1998, George Charitopoulos began to travel to Greece for extended stays. From 2001, he spent almost the entire year in Greece. Pantelis Charitopoulos assumed the role of general manager of the Golden Chef business and became the effective controller of the Golden Chef group of companies. He is a director of Haritopoulos and Evia. Ms Marina Charitopoulos, the sister of Pantelis Charitopoulos, also played a role in the conduct of the Golden Chef business.

Within the Golden Chef group, the third plaintiff, AMS, owned the assets of the business, including approximately 150 catering vans, and preparation and storage assets. GCA was a principal trading corporation, while GCV operated the Victorian arm of the business.

Evia is the registered proprietor of premises situated at 36-56 Whiteside Road, Clayton, in Victoria, which it leased to GCV.

Haritopoulos is the registered proprietor of the Athol Park premises situated at 203‑215 Hanson Road, Athol Park, South Australia and 72-76 Lavinia Street, Athol Park, South Australia, which it leased to GCA.

During the 1990s, the Golden Chef business expanded from its early, small-scale operations by acquiring competing businesses. Over the last three years, it achieved an average turnover of $25 million per annum.

In more recent times, however, the Golden Chef group experienced financial difficulties.

On 4 August 2005, Mr Muldoon and Mr Scott were appointed receivers and managers of GCA and AMS.

A licence agreement dated 4 August 2005 (“the licence agreement”), executed by the receivers, AMS, GCA, CBA, CBFC, Rosa and George Charitopoulos and GCV and others, permitted the Golden Chef business to continue to use the assets of GCA and AMS and to use and occupy the Athol Park premises. Under the licence agreement, Rosa and George Charitopoulos and GCV (which was not yet in receivership), undertook to pay, or cause the Golden Chef entities to pay or guarantee, various payments, including the rent due to Haritopoulos for the lease of the Athol Park premises for the term of the licence agreement. The rental for the Athol Park premises was payable monthly in advance.

On 26 August 2006, Haritopoulos (which was then in receivership) issued a tax invoice for the sum of $50,017.97 for the rent of the Athol Park premises for September 2005. An email of Tim Mableson of Ferrier Hodgson (then an adviser to the Charitopoulos family business) to Jason Heidt (a manager at Sims Partners) dated 23 September 2005 stated that the September rent was paid on 23 September 2005. A receipt of the Bank of South Australia recorded the receipt of $50,017.97. The email of Mr Charitopoulos to Mr Heidt dated 26 September 2005 stated that the rent had been paid. At the hearing, Mr Charitopoulos did not concede that the rent for September 2006 had been paid, but advanced no explanation of his email dated 26 September 2005 or the Bank of South Australia receipt.

By statutory declarations dated 29 September 2005 (“the statutory declarations”), Pantelis and Rosa Charitopoulos declared that all plant, equipment, stock and assets used by the Golden Chef group in connection with the business (other than real estate, trade marks and certain excluded assets) were legally and beneficially owned by AMS. They further declared that the plant, vehicles and equipment owned by AMS were accurately listed in schedules to the licence agreement.

In the period leading up to Christmas 2005, there were defaults in the payments due under the licence agreement and the rent due to Haritopoulos. By a deed of agreement dated 23 December 2005 (“the deed of agreement”), Mr Pantelis Charitopoulos, his parents, and GCV agreed to pay GCA and AMS the outstanding amounts under the licence agreement and to arrange for refinancing of the CBA and CBFC loan facilities by 16 January 2006. By clause 4.1, of the deed of agreement, Haritopoulos agreed that notwithstanding any breach or default by GCA as tenant of the Athol Park premises, and without requiring the payment of any arrears of rent, other outgoings or charges under the lease, the lease would not be terminated, and the receivers could remain in possession until 30 March 2006.

As at 3 January 2006, the amounts due under the licence agreement and the deed of agreement had not been paid by GCV or the Charitopoulos family. The chargeholders therefore terminated the licence agreement. On 6 January 2006, it appointed Messrs Muldoon and Scott receivers of GCV. During January, the operation of the Golden Chef business ceased in Adelaide and Melbourne.

On 29 January 2006, the rental agent for Haritopoulos and Evia issued a tax invoice for $50,017.97 for the rent of the Athol Park premises for February 2006 and a tax invoice for $22,916.66 for rent of the Clayton premises for February 2006.

To Mr Charitopoulos’ knowledge, the receivers proposed to sell the assets subject to the charges. On 23 February 2006, Mr Charitopoulos met with Mr Heidt and Mr Cantone of Sims Partners. He offered to purchase the assets for their auction value, but nothing eventuated. By a letter dated 28 February 2006 to Mr Scott, Mr Charitopoulos again made various proposals to purchase the assets.

The receivers determined to sell the assets by auction. On 4 and 11 March 2006, on the instruction of the receivers, Mason Gray Strange, Dominions Auctioneers placed advertisements in The Age and The Advertiser newspapers for the forthcoming auction of the Golden Chef assets on 27 and 28 April 2006.

Mr Charitopoulos acknowledged that he wished to prevent the proposed auction from going ahead. He denied, however, that that was because he wished to continue the mobile catering business, and required the assets for that purpose. He asserted that he wished to retain only the food manufacturing equipment. He contended that he believed that the auction would jeopardise the security for Haritopoulos’ claims for outstanding rent.

On 6 March 2006, Mr Scott received a letter dated 27 February 2006 from the rental agent for Evia and Haritopoulos enclosing invoices for outstanding rent, council rates and land tax for March 2006 for both the Clayton premises and Athol Park premises.

On 7 March 2006, at Mr Charitopoulos’ behest, Haritopoulos issued a notice of re‑entry and termination of the lease in respect of the Athol Park premises. It also issued a warrant to distrain pursuant to the Landlord and Tenant Act 1936 (SA) (“Landlord and Tenant Act”) for the sum of $350,125.79, which was asserted to be the rental due to Haritopoulos as at 1 March 2006.

The parties’ dispute over Haritopoulos’ claim for rent is not an issue for determination in the present application. Whether Mr Charitopoulos had, as he deposed, a bona fide belief that the plaintiffs owed rental to Haritopoulos for which he was entitled to distrain or offset against items purchased at auction may, however, be relevant to whether the admitted breach of the 4 April 2006 order was wilful in the sense of knowingly disobedient, and to the appropriate penalty, if any, for such breach.

Mr Charitopoulos contended that rent was outstanding and that he believed that he was therefore entitled to change the locks and take possession of the Athol Park premises and the assets, as he did first on 7 March 2006, and, (despite the 4 April 2006 order that the receivers could retain possession until 4.30pm on 5 May 2006), for a second time on 2 May 2006.

The plaintiffs contended that Mr Charitopoulos could not have had a genuine belief that there was outstanding rent entitling him either to offset it against the price of assets purchased at auction or to distrain, despite the 4 April 2006 order. Mr Charitopoulos conceded that the receivers have continued to pay the rent due for both the Athol Park premises and the Clayton premises in their capacity as receivers, and that they had paid all rental due since their appointment on 6 January 2006.

At the hearing, Mr Charitopoulos contended that he believed that it was necessary to distrain or to prevent the auction, in order to retain security for the outstanding rent. He conceded, however, that he was aware that CBA indemnified the receivers for liability for rent.

On 7 March 2006, on the instructions of McNamara Lawyers, (solicitors acting for the defendants from March 2006) the fifth defendant, Frank Church, of the fourth defendant, Investigators (Australia) Pty Ltd, changed the locks of the Athol Park premises, thus excluding the receivers.

The receivers were consequently also excluded from access to the assets stored at the premises, which they claimed were subject to the charges in favour of CBA and CBCF, pursuant to which they were appointed.

At the hearing of the contempt summons, Mr Charitopoulos initially denied that when he took possession of the Athol Park premises on 7 March 2006, he was aware that the deed of agreement permitted the receivers to remain in possession of the Athol Park premises until 30 March 2006, notwithstanding the non‑payment of arrears of rent. Ultimately, he conceded that the deed of agreement did so provide. He stated that he did not remember signing the deed of agreement and had a “different interpretation” of it. He was not “too clear” on what his different understanding of the deed of agreement was.

The “lock out” of the receivers raised their concerns about the insurance of the relevant assets. It also appeared to prevent the receivers from conducting the scheduled auction of the assets on site.

By a letter to McNamara Lawyers dated 8 March 2006, Middletons, the solicitors for the plaintiffs, asserted that Haritopoulos’ actions in purporting to terminate the lease and distrain for rent constituted a breach of the deed of agreement. Middletons demanded that Haritopulos deliver up possession of the Athol Park premises and withdraw the warrant to distrain by 4.00pm on 9 March 2006. In a telephone conversation with Mr Chambers of Middletons, Mr McNamara stated that his clients would not undertake to comply with those demands.

Mr Muldoon made a declaration dated 9 March 2006 pursuant to s.22 of the Landlord and Tenant Act, stating that GCA had no property rights or beneficial interest in the assets located at the Athol Park premises. He forwarded the declaration to McNamara Lawyers, Haritopoulos and Investigators Australia Pty Ltd.

On 16 March 2006, the plaintiffs issued a generally endorsed writ in this proceeding. The writ sought injunctive and declaratory relief and damages for dispossession of chattels owned by AMS and charged in favour of CBA and CBFC, and relief in relation to the defendants’ threatened and intended interference with the chattels.

The writ alleged that the chattels comprised plant, equipment and motor vehicles held either at the Clayton premises, of which Evia was the lessor, or at the Athol Park premises, of which Haritopoulos was the lessor. It further alleged that the defendants had, on or about 7 March 2006, changed the locks at both premises, thereby excluding the receivers, in breach of the deed of agreement.

The plaintiffs also issued a summons dated 16 March 2006, seeking an interlocutory injunction restraining the defendants from excluding the receivers from the assets specified in the schedule and from possession of the Athol Park premises. On 17 March 2006, Whelan J ordered the defendants to file and serve, inter alia, any affidavits in relation to the summons for interlocutory relief by 22 March 2006. No material was filed.

Between 7 and 24 March 2006, certain assets were removed from the Athol Park premises while under Haritopoulos’ control.

By order made 24 March 2006, Whelan J ordered, inter alia, that

“The defendants forthwith hand over possession of the premises at 205‑215 Hanson Road, Athol Park, South Australia and 72-76 Lavinia Street, Athol Park, South Australia and 36-56 Whiteside Road, Clayton, Victoria and of the assets in those premises to the first named and second named plaintiffs and permit the first named and second named plaintiffs to remain in possession until 4.30pm on 4 April 2006 or further order.”

The receivers gave undertakings not to dispose of any assets subject to the order and to allow the defendants and their authorised agents access to the Athol Park premises on reasonable notice.

Mr Moore of counsel appeared on behalf of the defendants at the hearing before Whelan J on 24 March 2006.

At the hearing on 24 March 2006, the summons filed on 16 March 2006 was adjourned to 4 April 2006, in order to allow the defendants time to file responsive material. The defendants were ordered to file and serve any affidavits upon which they wished to rely by 30 March 2006.

From 24 March 2006, the receivers resumed possession of the Athol Park premises. Mr Charitopoulos testified that he was unsure whether he saw the order of 24 March 2006. He testified that he did not receive reports of what occurred in Court and left the matter to Mr McNamara of McNamara Lawyers.

No responsive material was filed on behalf of the defendants for the hearing scheduled for 4 April 2006.

The defendants’ then Melbourne solicitors, Septimus Jones & Lee, filed a notice of ceasing to act dated 3 April 2006.

CONTEMPT OF 4 APRIL 2006 ORDER
The 4 April 2006 order

At the hearing on 4 April 2006 before Whelan J, the defendants were represented by Mr Lawler. The 4 April 2006 order stated:

1) The Defendants permit the Firstnamed and Secondnamed Plaintiffs to remain in possession of the premises at 203-215 Hanson Road, Athol Park, South Australia, and 72 to 76 Lavinia Street, Athol Park, South Australia and 36 to 56 Whiteside Road, Clayton, Victoria and of assets in those premises until 4.30 pm on 5 May 2006 or further order.

2) The Firstnamed and Secondnamed Plaintiffs are released from their undertaking given on 24 March 2006 not to dispose of any assets the subject of orders made 24 March 2006.

3) The further hearing of the Plaintiffs’ summons dated 15 March 2006 is adjourned to 12 May 2006.

4) The time period fixed by the orders made 24 March 2006 for the Defendants to file and serve any affidavit material on which they intend to rely at the hearing of the summons be extended to 14 April 2006.

5) There is liberty to apply upon 2 business days written notice.

6) Costs are reserved.

The receivers undertook to pay Haritopoulos and Evia rental of $109,716.83 and $50,268.81 for the Athol Park and Clayton premises respectively for January, February and March (excluding the period of re-entry) by 10 April 2006 and to pay rent for the occupation of both premises from 1 April 2006 fortnightly in arrears.

The 4 April 2006 order thus permitted the receivers to retain possession of the Clayton and Athol Park premises until the late afternoon of 5 May 2006 or further order, on the basis of their undertaking to pay rent. It also cleared the way for the receivers to conduct the auction scheduled to take place at the Athol Park premises on 27 and 28 April 2006.

On 10 April 2006, the receivers paid rent of $159,985.64 required by the undertakings given to the Court on 4 April 2006.

By a letter to the receivers dated 12 April 2006, McNamara Lawyers required them to release specified assets, which were alleged to belong to Golden Chef companies other than those in receivership (AMS, GCA and GCV). The letter advised that the writer’s clients would take possession of the specified items on the following day. The receivers disputed the claim to the specified items. By a letter to McNamara Lawyers dated 12 April 2006, Middletons advised that the claimed items substantially corresponded to the assets which the statutory declarations declared to be owned by AMS and that the receivers would seek injunctive relief if there were any attempt to interfere with their possession.

On 13 April 2006, the receivers paid rent of $33,662.14 owed to Evia and Haritopoulos for the first two weeks of April in arrears.

The defendants, in pleading to contempt of the 4 April 2006 orders, necessarily admitted the elements, including that the contemnor had knowledge of the terms of the order. Mr Charitopoulos’ testimony at the hearing did not, however, clearly acknowledge that.

He initially testified that he did not recall seeing the 4 April 2006 order. He testified that he was not sure whether he had read it.

Ultimately, Mr Charitopolous conceded that his lawyers had sought and obtained his agreement to the 4 April 2006 order. He recalled discussions about permitting the receivers to stay at the premises until 5 May 2006, provided that they paid rent. He acknowledged that he had understood that the 4 April 2006 order would permit the receivers to stay and the scheduled auction to proceed. Given the defendants’ plea, it was not necessary for the plaintiffs to establish that Mr Charitopoulos had knowledge of the terms of the 4 April 2006 order, to which he agreed. In any event, if and in so far as Mr Charitopoulos’ evasive testimony may have sought to suggest that he did not have knowledge of the terms of the 4 April 2006 order, I reject that conclusion.

In his affidavit sworn 4 September 2006, Mr Charitopoulos deposed that “(t)he auction of the plant and equipment was the time when the reality of the failure of the business really hit home to me.” The defendants determined to apply to the Supreme Court of South Australia to prevent the auction.

At 6.20 pm on 24 April 2006, the defendants notified Middletons of an application for an injunction to be heard in the Supreme Court of South Australia on 26 April 2006 in order to halt the scheduled auction of assets at the Athol Park premises. 25 April 2006 was Anzac Day and a public holiday. The application was heard on the afternoon of 26 April 2006 by Layton J, who dismissed it with costs.

At about 8.00pm on the evening of 26 April 2006, a tele‑conference occurred between Mr McNamara and Mr Viscerello of McNamara Lawyers, Mr Charitopoulos and Mr Di Russo, a Melbourne accountant. Mr McNamara testified that in the course of the teleconference, Mr Di Russo stated that he was able to arrange finance through the NAB for Haritopoulos to purchase plant and equipment at the auction.

Although his statutory declaration stated that AMS owned the relevant chattels, in his affidavit of 4 September 2006, Mr Charitopoulos deposed that at the time of scheduled auction, he believed that a large number of the assets were in fact owned by Haritopoulos. At the hearing, he initially stated that his statutory declaration was correct. He then testified that he had signed it in error and under duress. He agreed that the statutory declaration was necessary to enable the Golden Chef business to continue to use the assets to trade. He then stated that the statutory declaration was false, although he did not know it at the time, as he had not had time to get it checked properly.

In his affidavit of 4 September 2006, Mr Charitopoulos deposed that he believed that Mr Di Russo had arranged a finance facility with the NAB to pay for any goods purchased at auction. He further deposed that he had believed that Haritopoulos was entitled to a set off of at least $222,000 which the plaintiffs owed it for rent for the Athol Park premises and that the security for the rental would be lost if the receivers sold the assets at auction.

At the hearing, Mr Charitopoulos testified that he had believed that because Haritopoulos owned certain assets or had a right of set‑off, bidding at auction, (although he never, at any stage, intended to pay for any items), “was another way of ensuring that I received the income which I felt that I deserved.”

The auction of assets subject to the CBA and CBFC securities at the Athol Park Premises was conducted by Mason Gray Strange on 27 and 28 April 2006, on the instruction of the receivers.

Mr Codling, an officer of Mason Gray Strange, deposed that he auctioned 90 vehicles. Mr Charitopoulos attended the auction, accompanied by his associate, Mr Dusko Dobric. He was the successful bidder for 17 vehicles and a variety of other items and equipment, with a total value of $320,000. He did not pay for the items at the conclusion of the auction.

Given that Mr Charitopoulos testified that he never intended to pay for the assets bought at auction, the significance of whether he or Haritopoulos had the means to pay for them (which was examined extensively at the hearing) is unclear. Mr Charitopoulos’ evidence on that issue was evasive, equivocal, inconsistent and unconvincing.

In his affidavit sworn 4 September 2006, he deposed that he had requested Mr Di Russo to arrange a facility with the NAB to allow him to purchase the plant, vehicles and equipment at auction after the Supreme Court of South Australia dismissed the application for an injunction. He deposed that at the time of bidding for the assets at auction, he believed that the finance facility had been arranged with the NAB, but within a day or two after the auction, he discovered that the finance facility had not been finalised and funds were not available.

In paragraph 41 of his affidavit of 4 September 2006, Mr Charitopoulos denied Mr Codling’s assertion that he told Mr Codling on 2 May 2006 that he would have a cheque ready to pay for the items by 12.00pm the following day, “as it was impossible, as I had met with the NAB when I was in Melbourne on 1 May 2006 and I knew that the funds would not be available until documentation had been completed.”

In paragraph 57 of his affidavit sworn 4 September 2006, Mr Charitopoulos again deposed that “the monies that were said to have been arranged by Mr Di Russo have not materialised” and that he had therefore arranged for the sale of certain assets in order to offer to pay for assets in the possession of Booze2U.

His affidavit sworn 4 September 2006 thus gives the impression that Mr Charitopoulos depended entirely on the NAB facility which Mr Di Russo was arranging in order to pay for assets purchased at the auction, and that when the facility did not materialise, he was unable to pay.

In contrast, at the hearing Mr Charitopoulos contended that he, or Haritopoulos, was able to pay for the assets bought at the auction without recourse to the NAB facility being arranged by Mr Di Russo. Although it was not mentioned in his affidavit, he testified that, at the time, he had had in place a facility with John Mathies, a private Victorian financier, for $1.4 million, but chose not to use it because it required the entire sum to be drawn down. The security documentation was not drawn up because he did not require the money and did not wish to pay the high interest rates.

He also testified that because he had a good rapport with the NAB, he “strongly felt that had I needed the money the National Australia Bank would have given me the money on the spot.” Contrary to his affidavit, he initially testified that he did not know on 1 May 2006 that funds would not be available because the documentation was not completed. When taken to his affidavit, he reaffirmed its assertion.

He then asserted that prior to the auction, he had believed when he spoke to Mr Di Russo at 7.00 or 8.00pm on the previous evening that the NAB facility could have been arranged by the next morning. He initially testified that Mr Di Russo did not tell him that he had arranged a facility. He subsequently testified that Mr Di Russo had confirmed that the funds would be available.

At the hearing, Mr Charitopoulos stated, for the first time, that Mr Di Russo was also arranging other facilities for him.

He also testified that he had had other means of raising funds available to him at the time of the auction. There was equity in properties, including the following: a property situated at 33 Pirie Street, Adelaide was owned by a Charitopolous family trust and had $2.4 million worth of available equity; another property owned by Haritopoulos had approximately $3 million in equity; a property in Toorak was worth $680,000 and a property in Thebarton, Adelaide, had available equity of approximately $2 million; a commercial building in Victoria Square, Adelaide, had equity of approximately $800,000 and a retail outlet in Adelaide had equity of approximately $300,000. Mr Charitopoulos stated that he controlled the companies which were the trustees of family trusts which owned the above properties. Charitopoulos family members and close friends were the beneficiaries of the trusts.

Mr Charitopoulos maintained that it was never his intention to pay for the items purchased at auction, but that he wished to put in place finance, in case he was obliged to do so.

On 1 May 2006, the auctioneers, Mason Gray Strange, rendered Mr Charitopoulos an invoice for the assets he had purchased at auction. Mr Heidt of the receivers instructed Mason Gray Strange not to release any assets until they had received payment in full. Mr Charitopoulos did not pay for the assets purchased at the auction on 1 May 2006. Mr Heidt informed him that he would only be entitled to take possession of the items if he paid for them by 4.00pm on 2 May 2006.

Events of 2 May 2006

On 2 May 2006, Mr Codling of Mason Gray Strange also informed Mr Charitopolous that he could take delivery of the vehicles and other items only if he tendered payment in full by 4.00pm on 2 May 2006.

The facsimile of McNamara Lawyers to Mr Chambers of Middletons dated 1 May 2006 referred to Haritopoulos’ purchase of plant and equipment to the value of $320,000 at the auction. It asserted that the ownership of some of the assets was in dispute and that Haritopoulos required the cost of disputed items to be deducted from the auction price.

The letter further stated that “our client requires a credit of up to $300,000 being for the rental owed by [the receivers] to [Haritopoulos] for the period from 4 August 2005 to 6 January 2006”. It stated, “On this basis our client requires to attend the premises on Monday and take possession of the items it purchased … ” If that proposal were not acceptable, the writer’s instructions were to “apply to the Supreme Court of Victoria to have the items released”.

By a facsimile in response dated 1 May 2006, Middletons affirmed that all the items of plant, equipment and vehicles sold at the auction were owned by the companies in receivership and denied that ownership was disputed.

Middleton’s facsimile stated, “The sale price for these items is payable in full”. It rejected Haritopoulos’ proposal to deduct the value of allegedly disputed items from the purchase price. It also rejected “the proposition that the receivers owe rent to Haritopoulos and Evia for rent of the Athol Park and Clayton premises for the period from 4 August 2005 to 6 January 2006.” It stated that the rent had been paid by GCV for the months of August, September and possibly October 2005.

The facsimile stated, “It is wholly inappropriate for your client to bid at auction (thereby excluding other potential purchasers from buying relevant plant, equipment and vehicles) and then seek to deduct from the purchase price payable a spurious and misconceived set-off claim. We will bring this matter to the attention of His Honour Justice Whelan in due course.”

The facsimile stated that Mr Charitopoulos had been informed that he would be entitled to take delivery of the items purchased at auction only on payment in cash or by bank cheque by 4.00pm on 2 May 2006 and that he had indicated that he would pay by bank cheque. It further stated that Mr Charitopoulos had denied any knowledge of the set-off claim and had stated that McNamara’s letter was sent without his instructions.

In cross-examination, when Mr Charitopoulos was asked: “When did you turn your mind to exercising a set-off rather than making payment for these goods”, he initially stated that he did not understand. He subsequently stated that he “always had that opinion” [to offset the purchase price of goods bought at auction against rent owed to Haritopoulos.] He conceded that the assertion in his affidavit sworn 4 September 2006 that he only thought about set-off after the application to prevent the auction failed was incorrect.

Mr Charitopoulos, in his affidavit sworn 4 September 2006, stated that the rental owed to Haritopoulos at the time of the auction was approximately $220,000. He was unable to say, at the hearing, how that sum was calculated, but assumed that it was for the period from August 2005 to January 2006. He did not concede, despite the receipt of the Bank of South Australia and his letter of acknowledgment, that the rent for September 2005 was paid.

In relation to the disparity between the $220,000 in claimed rent and the $320,000 owed for assets purchased at auction, Mr Charitopoulos testified that he had purchased certain goods at the behest of the auctioneers. He stated that “some goods I bid for was told to me to do by the auctioneers, they told me to bid for them”.

He was unsure whether he spoke to Mr McNamara about claiming a set-off on 1‑2 May 2006, and did not remember instructing him to write a letter claiming set‑off.

Mr Charitopoulos denied that, as at 1 May 2006, he knew that the receivers disputed his claim that they were obliged to pay rent for the period prior to January 2006. He also denied that he knew that the receivers disputed the claim to set-off.

When asked whether he believed that the receivers rejected his plan for set-off, Mr Charitopoulos repeatedly responded that he did not remember and that he did not remember discussing with Mr McNamara an application to the Supreme Court of Victoria to obtain the claimed set-off.

Following the auction on 2 May 2006, 33 vehicles were held at Athol Park Main Premises. The vehicles were:

17 vehicles purchased by Haritopoulos;
8 vehicles withdrawn from sale;
4 vehicles purchased by third parties;
4 unsold vehicles.

On 2 May 2006, Mr Codling of Mason Gray Strange received a tip-off that Mr Charitopoulos would retake possession of the Athol Park premises that evening. Mr Codling telephoned Mr Heidt of the receivers to inform him of the tip off. Mr Heidt asked Mr Codling to attend the Athol Park premises. He also sent him a copy of the 4 April 2006 order. Mr Heidt said that he would arrange for security guards to attend the premises as soon as possible.

Mr Codling deposed that he arrived at the Athol Park premises at 5.45pm. He locked the gate. At his request, Mr Della Torre, another officer of Mason Gray Strange, concealed the keys to the vehicles.

At 5.55pm, a truck arrived and left again, as the premises were locked.

At about 6.00pm, a locksmith from Australian Locksmiths arrived. He announced that he intended to change the locks, on Mr Charitopoulos’ instructions. The locksmith left the premises after Mr Codling showed him a copy of the 4 April 2006 order.

At about 6.20pm, Mr Charitopoulos, accompanied by his associate, Mr Dobric, arrived at the premises. According to Mr Codling, Mr Charitopoulos told Mr Codling that he was “taking possession of the vehicles and was distraining for rent”.

Mr Codling then showed Mr Charitopoulos the 4 April 2006 order. He explained that it permitted the receivers to remain in possession of the Athol Park premises and the assets situated there until 5 May 2006. Mr Codling deposed that Mr Charitopoulos responded with words to the effect that the laws from a Victorian Court “meant nothing” in South Australia. Mr Charitopoulos deposed that he responded that he thought that South Australian law overrode the 4 April 2006 order.

At about that point, the locksmith returned and began to pick and change the locks. Mr Della Torre attempted to prevent the locksmith from proceeding. Mr Codling deposed that Mr Charitopoulos physically restrained Mr Della Torre from attempting to stop the locksmith from changing the lock. Mr Charitpolous, in his affidavit sworn 30 August 2006, denied that he touched Mr Della Torre, who was situated on the opposite side of the fence to himself. At the hearing, Mr Codling explained that there was an aperture in the fence. He testified that there was a scuffle and he saw a bit of “pushing and scrapping”.

A security guard from Chubb arrived at the premises at 6.30pm and stood at the gate. The police were called by both Mr Codling and Mr Charitopoulos. They arrived at about 7.00pm. The police expressed the view that the dispute was a civil matter. At the hearing, Mr Codling testified that one of the police officers stated that he was obliged to allow Mr Charitopoulos to enter the premises. Mr Codling disagreed with that view. He asked the police to call their duty solicitor, but no duty solicitor was available. The police officers then left. Due to the police officer’s statement, Mr Codling desisted from attempting to prevent the locksmith from changing the locks. He permitted Mr Charitopoulos, the locksmith and Mr Dobric, to enter the Athol Park premises.

Mr Codling deposed that Mr Charitopoulos demanded the keys to the vehicles held at the premises. Mr Della Torre initially refused to comply. Mr Charitopoulos grabbed a bag of keys held by Mr Della Torre. He stated that he would get very annoyed and frustrated if not given the keys to the remaining vehicles. Mr Codling deposed that he telephoned Mr Heidt, who spoke to Mr Charitopoulos on the telephone. Mr Charitopoulos stated that he wanted the vehicles’ keys only as security for the assets against which he had distrained. He stated that “all assets will remain on site”.

Subsequently, on being told that some of the vehicles had been sold to third parties, Mr Charitopoulos agreed to hand their keys to a Chubb security guard present at the premises.

Mr Della Torre then handed the balance of the keys to Mr Charitopoulos, who, according to Mr Codling, reiterated that no vans or assets would leave the premises as he only wanted the keys as security or in case of fire. Mr Charitopoulos denied, however, that he stated that no assets or vans would leave the premises.

Mr Codling and Mr Della Torre left the Athol Park premises at 8.00pm. Two security guards, including Mr Samuel Mathews (who had arrived at the premises at 7.45pm), remained.

Mr Mathews, by his affidavit, sworn 19 May 2006, also deposed to the events of 2 May 2006. Mr Mathews was not cross-examined. He deposed that he arrived at the premises at 7.45pm and entered the lunch room. At 8.50pm, or shortly thereafter, about five vehicles arrived at the premises, carrying seven to nine men in addition to Mr Dobric and Mr Charitopoulos. Mr Mathews witnessed about nine men removing books and records from the office and removing about 15 vehicles with their headlights turned off. At 9.35pm, two trucks arrived and the men loaded other items into them.

Mr Pantelis Charitopolous, in his affidavit sworn 30 August 2006, did not deny removing the vehicles and assets, but deposed that the vehicles were removed with their lights on, because he did not believe that he had anything to hide. He further deposed that the vehicles ‘required to undertake the distraint for rent’ arrived at the same time and not at staggered times, as Mr Mathews had deposed.

Mr Mathews then telephoned Mr Codling, who arrived at about 11.30pm. The police had also arrived. Mr Codling deposed that the police instructed Mr Charitopoulos to lock up the premises and not to remove any more vehicles. The police, Mr Codling, and Mr Charitopoulos and his party, left the premises at about 1.00am. Mr Mathews deposed that he subsequently observed Mr Charitopoulos return to the premises with an assistant at 1.40am and remove further items, including computer hard drives and software. Mr Charitopoulos gave evidence that he removed his own personal computer, but not any hard drives.

Mr Mathews deposed that when he protested at the removal of the further items, Mr Charitopoulos stated that it was his equipment and that Mr Mathews should mind his own business and was trespassing. According to Mr Mathews, Mr Charitopoulos pushed him three times in the chest, until he was on the boundary of the premises. Mr Mathews then abandoned the attempt to prevent the removal of the items.

Mr Charitopoulos denied assaulting Mr Matthews. He deposed that when he was putting his computer in the car, an unknown person approached him from behind and grabbed him by the left shoulder. He stated that he resisted by pushing the person away with an open hand to the chest.

The following day, 3 May 2006, Mr Codling attended the Athol Park Premises in the morning. He concluded that 21 vehicles and other assets, including printers and computer equipment, had been removed. The vehicles and assets removed included vehicles and items which had not been purchased by Mr Charitopoulos at auction. Mr Charitopoulos attended the premises and gave Mr Della Torre a key to the premises at about 8.30am. Mr Codling deposed that Mr Della Torre reported that Mr Charitopoulos removed several more vehicles at that time.

By the letter of Haritopoulos Group to Mr Scott of Sims Partners dated 2 May 2006, Mr Charitopoulos advised that he had distrained for rent of the Athol Park premises. The letter stated, “I am further aware that the Victorian Courts granted your office ‘possession’ of which I will follow by means of allowing Sims Partners staff or other nominated persons possession to the factory by means of joint possession assuming reasonable notice is given. At no time can any item be removed from the said premises without my knowledge or approval, furthermore your staff or nominated person will only be allowed access to the site with my representatives being present.”

The letter attached a notice of re-entry of the Athol Park premises and termination of the tenancy, requiring GCA to “deliver up possession of the premises to Haritopoulos or its duly authorised agent Dusko Dobric or nominee of Booze2U Pty Ltd of PO Box 2575 Regency Park SA 5942”.

Mr Eglinton exhibited to his affidavit a newspaper clipping from The Advertiser, containing a photograph of two persons identified as Pantelis Charitopoulos and Marina Charitopoulos. He deposed that the person identified in the clipping as Pantelis Charitopoulos is the same person whom he served with the 5 May 2006 order on 9 May 2006 and who confirmed to Mr Eglinton on 10 May 2006 that he was Pantelis Charitopoulos.

Mr Codling, of Mason Gray Strange, confirmed that on the morning of 10 May 2006, Mr Eglinton arrived at the offices of Mason Gray Strange, after repossessing a van identified as having been removed from the Athol Park premises. Mr Codling stated that the van driver, who was distressed, had sought to tender a cheque in order to retain the vehicle. He refused to accept the cheque, because he required payment of the entire outstanding account.

Mr Codling also testified that, at a certain point, Marina Charitopoulos, Mr Charitopoulos and Mr Dobric arrived at the reception area of Mason Gray Strange. He stated that Messrs Eglinton, Charitopoulos and Dobric then accompanied him into his office. According to Mr Codling, Mr Charitopoulos was unhappy about the repossession of the van and requested that it remain in his or Mr Dobric’s possession. Mr Codling then telephoned Mr Heidt to seek his consent for Mr Charitopoulos to retain the van, which was not granted.

Mr Codling testified that he overheard the exchange between Mr Eglinton and Mr Charitopoulos. He deposed in his affidavit, and testified at the hearing, that in response to Mr Eglinton’s question “are you Pantelis Charitopoulos today?” Mr Charitopoulos responded with words to the effect of “I’m Pantelis today. I was Pantelis yesterday”.

He conceded that he could not recall the precise words, but despite rigorous cross-examination, consistently denied that Mr Charitopoulos replied “I am Pantelis Charitopoulos every day”. Mr Codling explained that Mr Charitopoulos’ reply stuck in his mind, because prior to Mr Charitopoulos’ arrival, Mr Codling and Mr Eglinton had been discussing the service on Mr Charitopoulos on the previous day.

Mr Codling presented as a clear, consistent and credible witness. It was suggested that he may have discussed his evidence with Mr Eglinton, that his testimony was influenced by the discussion, that there was inconsistency with his affidavit and that he lacked a clear recollection. I am satisfied, however, that his account was truthful and convincing.

Mr Charitopoulos denied that he was served with the 5 May 2006 order on 9 May 2006 or, indeed, at any time thereafter. He contended that his associate, Mr Koimtsidis, was the person standing on Pirie Street on the afternoon of 9 May 2006, who was observed by Mr Heidt and served by Mr Eglinton.

In his sworn affidavit, Mr Charitopoulos deposed that Mr Koimtsidis was a tenant of the Epworth Building at 33 Pirie Street, Adelaide, whom he had known “in business and socially for a number of years”. He deposed that on the Friday preceding 9 May 2006, Mr Koimtsidis had lent him his Holden Statesman vehicle with the number plate “ARCHIE”, because Mr Charitopoulos was “having problems with his own vehicle.”

Mr Charitopoulos, at the outset of his testimony at the hearing, corrected the assertion in his affidavit and stated that he had borrowed Mr Koimtsidis’ car because he felt uncomfortable driving his own car (a Mercedes Benz) when “I owe a lot of people in Adelaide a lot of money, in excess of $3million … a lot of small people”. At the hearing, Mr McNamara had earlier testified that he had advised Mr Charitopoulos (who turned up at the auction in a Porsche and who had also been driving a Mercedes Benz and Bentley) not to drive “those types of cars given the circumstances”. Mr Charitopoulos stated that it occurred to him only the day before giving evidence that the assertion in the affidavit about having problems with the vehicle was untrue, or might be misunderstood.

He was evasive when questioned about whether he had discussed the issue with anyone.

Mr Charitopoulos, in his affidavit, testified that he was not wearing a coat or suit jacket on the afternoon of 9 May 2006. Mr McNamara had been unable to recall whether Mr Charitopoulos was wearing a jacket when he visited McNamara’s office shortly after the incident on Pirie Street. At the outset of giving evidence, Mr Charitopoulos corrected his affidavit to state that he was “not sure about the jacket, whether I was wearing one or not”.

Mr Charitopoulos, in his affidavit, deposed that he was the driver of the Holden Statesman on the afternoon of 9 May 2006, and was travelling to the Epworth Building to pick up Mr Koimtsidis, who was waiting for him. He deposed that on arrival, he pulled up in the laneway, parked the car and observed Mr Koimtsidis standing two to three metres away from him near the T-junction of the laneway and Pirie Street. Mr Charitopoulos deposed that Mr Koimtsidis was talking on his mobile telephone at the time. Mr Charitopoulos deposed that he got out of the car and observed a person go to Mr Koimtsidis, speak to him, and drop some papers at his feet after which Mr Charitopoulos “observed Archie pick up the papers and take them into the Epworth Building”.

At the hearing, Mr Charitopoulos testified that the events of 9 May 2006 were “very clear” to him. He stated that when he drove to the Epworth Building he was “picking up Archie I think. I think we were going to do something or vice versa. I don’t recall this second why, but it was something to do with Archie … It was lunch or something else to do with Archie.”

He conceded that he did not remember what he and Mr Koimtsidis did after the incident. He then stated that although he did not remember exactly, he believed they went to lunch.

He conceded that he could not remember why it was necessary for him to get out of the parked Holden Statesman when stopping to pick up Mr Koimtsidis. He testified that he turned the car into the laneway. He parked the car four or five metres from where Mr Koimtsidis was standing. He believed that he left the engine running and got out of the car without closing the door. He suggested that he may have done that so that Mr Koimtsidis could drive the vehicle.

At the hearing, Mr Charitopoulos stated that the afternoon of 9 May 2006 was the first occasion on which he saw Mr Eglinton, but that he recognised him the next morning as the person who had mistakenly served Mr Koimtsidis on the previous afternoon.

Mr Koimtsidis, in an affidavit sworn 8 August 2006, deposed that he had known Mr Charitopoulos for at least three years and that he lent Mr Charitopoulos the Holden Statesman on about Friday, 5 May 2006 “as he was having problems with his own vehicle” and at 2.45pm on 9 May 2006 Mr Charitopoulos contacted him to return the vehicle to him. Mr Koimtsidis deposed that on 9 May 2006, he was wearing a white shirt and sports trousers and was not wearing a coat. He came down from his office to Pirie Street and stood at its junction with the private laneway that runs along the side of the Epworth Building in order to await Mr Charitopoulos’ arrival. He stood there talking on his mobile telephone and, while doing so, noticed Mr Charitopoulos drive past him and park the Holden Statesman in the laneway.

Mr Koimtsidis deposed that Mr Charitopoulos “stayed in and near the Statesman”. Mr Koimtsidis deposed that he continued talking on his mobile telephone with his back to Pirie Street facing a westerly direction when a man came up and started talking to him, but he continued with the mobile telephone conversation. When he turned around he “found a bundle of documents at my feet. They had been dropped by the man.”

Mr Koimtsidis deposed that “Pantelis was not near me at the time the documents were served on me but was further down the laneway with the Statesman.”

Mr Koimtsidis deposed that he picked the documents up, saw that they were legal documents and took them straight into the lawyers at the Epworth Building “and asked them what I should do with the documents as they did not belong to me”.

In his affidavit sworn 30 August 2006, Mr Charitopoulos deposed that Mr Koimtsidis was a person with whom he had had social and business contacts for some years. The affidavit provided no further details about the relationship with Mr Koimtsidis.

Mr McNamara deposed that he prepared the affidavit of Mr Koimtsidis sworn 8 August 2006. He deposed that on or about 7 September 2006, he was advised by Mr Davies of the defendants’ Melbourne solicitors, that a notice of cross‑examination had been served in relation to Mr Koimtsidis. He advised Mr Koimtsidis of that.

Mr Koimtsidis was interstate until 12 September 2006, but Mr McNamara met him on 14 September 2006 and told him that he would be required in Melbourne to give evidence at the hearing of the contempt summons. Although Mr Koimtsidis initially advised that he would be available, on 21 September 2006, he told Mr McNamara that he had to travel to Ghana on urgent business in relation to precious metal transactions for his company.

Mr McNamara deposed that Mr Koimtsidis, when reminded that he was required to give evidence in Melbourne, stated that he did not think that he would be back in Australia by the required date and that there was nothing he could do about it, as the business he was transacting in Ghana was too important to his company.

Mr McNamara further deposed “Our firm does not act for Mr Koimtsidis’ company and I do not know the details of the business the company or Mr Koimtsidis are involved in, in Ghana. I do not have any contact details for Mr Koimtsidis in Ghana”.

Mr Koimtsidis did not present for cross‑examination at the hearing of the contempt summons or at any time thereafter, although on 24 October 2006 at the conclusion of final submissions, at the defendants’ request I fixed a date, 8 November 2006, said to be convenient for Mr Koimtsidis, to provide a further opportunity for his attendance. Mr Koimtsidis failed to appear on 8 November 2006. On that day, the Court reserved its decision.

Although it could reasonably be inferred from the affidavit of Mr Charitopoulos sworn 4 September 2006 and the affidavit of Mr McNamara that Mr Koimtsidis’ business interests were independent of Mr Charitopoulos and that he could not be contacted while in Ghana, at the hearing, Mr Charitopoulos acknowledged in cross-examination that he was in regular telephone contact with Mr Koimtsidis in Ghana and was a partner of Mr Koimtsidis in a mining business in Ghana, which had been on foot for a number of years. When asked if he had informed his lawyers of the partnership, Mr Charitopoulos replied: “Maybe briefly. I haven’t really made a point about it. I can’t – I can’t be precise, I don’t know. I may have. I may have. I don’t know, I don’t see the relevance”.

On 14 December 2006, the parties were advised that the Court was ready to hand down reasons for judgment on 15 December 2006.

On 15 December 2006, the defendants sought that the Court defer handing down its reasons, in order to afford yet a further opportunity for Mr Koimtsidis to attend to give evidence. The affidavit of Mr Charitopoulos sworn 14 December 2006 in support of that application deposed that Mr Koimtsidis was expected to return to Australia in the week prior to Christmas and would be available to give evidence. Senior counsel for the plaintiffs was, however, unavailable during that week.

On 15 December 2006, I deferred handing down reasons for judgment and fixed the date of 8 February 2007 in order to afford a final opportunity for Mr Koimtsidis to give evidence. I ordered the defendants to file and serve an affidavit to apprise the Court of the arrangements for Mr Koimtsidis’ attendance by 1 February 2007. The defendants did not comply with that order. On 8 February 2007, Mr Koimtsidis did not attend for cross-examination. No explanation for his non-attendance was offered.

Given the repeated failure of Mr Koimtsidis to attend for cross-examination, despite the fixing of convenient alternative dates, and the absence of any excuse or explanation for his non-attendance, despite his close association with Mr Charitopoulos (which was not frankly acknowledged until a late stage), I place no weight on the affidavit of Mr Koimtsidis.

The affidavit of Mr Charitopoulos, sworn 30 August 2006, and the affidavit of Mr Koimtsidis, sworn 8 August 2006, did not indicate that Mr Charitopoulos accompanied Mr Koimtsidis into McNamara Lawyers to obtain advice. Mr Charitopoulos deposed that he observed Mr Koimtsidis go into the Epworth Building. That statement conveyed the impression that he did not accompany Mr Koimtsidis into the Epworth Building.

The affidavit of Mr McNamara sworn 30 October 2006, however, stated that he was, called to reception at his office on 9 May 2006 to speak to a person who “had just been served with documents”. He attended reception and saw Mr Koimtsidis, who was at the reception desk, while Mr Charitopoulos was in the reception area.

Mr McNamara deposed that Mr Koimtsidis advised him that someone had just thrown some documents at his feet while he was standing in the laneway next to the Epworth Building, which he had picked up and noted that they were Court documents apparently related to Pantelis Charitopoulos.

Mr McNamara deposed that he had been retained by the defendants, including Mr Charitopoulos. He deposed that he told Mr Koimtsidis that he did not want the documents and that Mr Koimtsidis should immediately write down what had happened, look at the documents and return them to the court or to the firm of solicitors that had prepared them. Mr Koimtsidis wrote a note which stated:

I, Mr A Koimtsidis, was talking on my mobile phone at the laneway of 33 Pirie St Adelaide and a man appeared to be talking to me but I was concentrating on my own conversation with my store manager. I then turned around and found the attached documents at my feet on the ground to my rear.
I then decided to approach a law firm who is operating in the same building which I work and handed them in as they are legal docs and must have some value to someone.

Mr McNamara, at the hearing, testified that prior to 9 May 2006, he knew Mr Koimtsidis by sight, but had not met him. He knew Mr Charitopoulos well and acted for him professionally. He testified that when Mr Koimtsidis stated that the documents had been thrown at his feet, Mr Charitopoulos stood back, but subsequently told Mr McNamara that he was sitting (or leaning) on the car when the documents were dropped on the ground.

Mr McNamara prepared Mr Koimtsidis’ affidavit of 8 August 2006 at the request of Septimus Jones & Lee, on the advice of Mr Moore of counsel.

By his fifth affidavit sworn 30 August 2006, Mr Charitopoulos acknowledged that “he went into the Epworth Building with Archie” when Mr Koimtsidis sought to consult lawyers.

Mr Charitopoulos deposed that he knew that the 5 May 2006 order had been made, but did not know its full extent. At the hearing, he was evasive about his level of knowledge. He initially testified that he did not know what the 5 May 2006 order was about and denied that Mr Moore of counsel had told him what it was about. He stated that Mr Moore “said there were orders, not necessarily the material of the orders”. Nevertheless, he deposed that he was surprised that the 5 May 2006 order had not been served on him by 9 May 2006. It is not clear why that would be the case if he did not know what it contained or if Mr Moore had not informed him of its content. Further, it is not apparent why counsel would inform Mr Charitopoulos only that an order had been made and omit to inform him of its substance. Ultimately, Mr Charitopoulos conceded that, when the papers were dropped at Mr Koimtsidis’ feet, “I had a rough idea what it was about.”

Mr Charitopoulos testified that he did not remember when he first saw the 5 May 2006 order. He could not state whether it was in June, July, August or September.

He testified that the alleged service on 9 May 2006 “was just a clear mistaken identity. It’s quite humorous. I was not served, sir.” He was, however, conscious that “If I hadn’t been served the orders … didn’t comply [sic] to me did they? I had to be served with them.”

He conceded that he realised on 9 May 2006 that Mr Koimtsidis had been mistakenly served instead of himself. Although he initially testified that Mr Koimtsidis wished to consult a lawyer, he subsequently acknowledged that he told Mr Koimtsidis to take the papers to Mr McNamara, because he wanted the events to be recorded. “I guess that’s evidence. That I – the wrong person had been served”.

Mr Charitopoulos was questioned on why he and Mr Koimtsidis took the 5 May 2006 order to the lawyers if it did not concern Mr Koimtsidis and he, to his knowledge, had not been served. He testified that when the 5 May 206 order was served, there was no discussion about it, other than “we just said to take them to the lawyers”. Ultimately, however, he conceded that “I told him to take them [the papers] to Mr McNamara … because I had a rough idea what they were.” He did not remember the conversation. He testified that he did not look at the papers and did not know if Mr Koimtsidis saw them.

Mr Charitopoulos was unable to explain why he had accompanied Mr Koimtsidis into the lawyer’s office, if he “didn’t deal with the matter”. He initially testified that he had walked out of the lawyer’s office at one point, but he appeared to modify or retract that evidence, stating that he was in the reception area but “I think I may have walked out of the door”.

Ultimately, he conceded that, “at some stage”, he had stood four or five paces behind Mr Koimtsidis because “I didn’t want to have anything to do with those documents … Because if I had seen the documents I thought that they would have had some implication so I deliberately stayed away from the documents”.

Mr Charitopoulos, in his affidavit sworn 3 October 2006, referred to the meeting with Mr Eglinton on 10 May 2006 in the offices of Mason Gray Strange. He deposed that he was having a discussion with Mr Codling of Mason Gray Strange in relation to a vehicle when Mr Eglinton came into the room and asked, “Are you Pantelis Charitopoulos today?” He denied that he responded as Mr Eglinton testified, deposing that instead he stated, “I am Pantelis Charitopoulos every day”.

At the hearing, he denied that he had a conversation with Mr Eglinton in which he complained about the repossession of a vehicle which was being used to deliver food that day. He could not place the conversation in the sequence of events and did not recall details. He initially testified that Mr Dobric was also present at the meeting. He stated that he recalled “parts” of the meeting. Ultimately, he testified that Mr Dobric may have been outside the offices of Mason Gray Strange consulting with the driver of the van which had been repossessed, and conceded that he could not clearly remember whether Mr Dobric was there at all.

He testified that when Mr Eglinton “asked me if I was Pantelis Charitopoulos today and I replied that I was Pantelis Charitopoulos every day, I think I may have said ‘Why wouldn’t I be?’.” He testified that he was a bit dumbfounded when asked the question.

He testified that he disliked Mr Eglinton from the outset of the meeting, although he had never spoken to him before, because Mr Eglinton was a process server. He testified that he was aware that Mr Eglinton was a process server because he had witnessed him attempt to serve Mr Koimtsidis on the afternoon of the previous day.

Despite his inability to recall details, Mr Charitopoulos asserted that he remembered the conversation with Mr Eglinton. “It was crystal clear”.

Service on 2 August 2006

Mr Eglinton testified that he became aware, as early as 11 May 2006, that Mr Charitopoulos denied that he had been served on 9 May 2006.

Mr Hume testified that once it became apparent that Mr Charitopoulos denied that he had been served on 9 May 2006, it was decided that it would be prudent to serve him again. He therefore arranged to send Mr Heidt further copies of the 5 May 2006 order and standing instructions to re-serve the order.

Mr Heidt recalled receiving a letter of Middletons dated 23 June 2006 enclosing multiple copies of the 5 May 2006 order to serve on Mr Charitopoulos a second time. He could not recall whether the 5 May 2006 orders had a blue stamp. He believed that he told Mr Eglinton to re-serve the 5 May 2006 order, and that Mr Eglinton stated that he still had copies of the original order and did not require more copies.

Mr Heidt believed Middletons had also sent him copies of the 5 May 2006 order with blue stamps in May 2006. However, he was not instructed to arrange for a further service of the 5 May 2006 order until late July 2006, at the same time as he was instructed to leave documents for George Charitopoulos at two separate addresses, in South Australia.

By a letter of Middletons to Mr Eglinton dated 24 July 2006, Middletons instructed Mr Eglinton to serve four Court documents and a covering letter on George Charitopoulos by leaving them at Pantelis Charitopoulos’ residence at 39 Elderslie Avenue, Fitzroy, South Australia.

Mr Hume of Middletons gave evidence. He identified the letter of Middletons to Mr Eglinton dated 24 July 2006. He was not the author of the letter, but was the contact reference.

The letter of Middletons to Mr Eglinton dated 24 July 2006 enclosed four sets of documents, each with a bulldog clip, two originals and two copies. Mr Eglinton did not observe a copy of the 5 May 2006 order included with the documents. He had received about twenty copies of the 5 May 2006 order from Mr Heidt prior to 9 May 2006 for service and had some left over. The letter of instruction did not refer to serving the 5 May 2006 order and did not state that copies were included.

The bundle of original documents returned by Mr McNamara to Middletons under covering letter of Mr McNamara to Middletons dated 2 August 2006 included a copy of the 5 May 2006 order with a blue stamp.

Mr Eglinton deposed that on 2 August 2006, he served a further copy of the 5 May 2006 order on Pantelis Charitopoulos.

Mr Eglinton deposed that Mr Charitopoulos was known to him because he had served him personally on 9 May 2006 with orders in this proceeding. He also had a conversation with him at a meeting on 10 May 2006 at the offices of Mason Gray Strange.

He deposed that he served Mr Pantelis Charitopoulos on 2 August 2006 by attending his residence at 39 Elderslie Avenue, Fitzroy in South Australia at about 8.50am. He knocked, and the door was opened by a woman. Mr Eglinton returned to his car, waited for a few minutes and knocked on the door again later. The door was opened by Mr Charitopoulos. Mr Eglinton had both the 5 May 2006 order and a bundle of documents for George Charitopoulos (to be left at the residence under an order for substituted service) in separate bundles. He handed the documents for George, which had a covering letter to George, to Mr Charitopoulos. Mr Charitopoulos looked at the documents and said he was not George, but Pantelis. That was acknowledged by Mr Eglinton, who said he knew he was not George, but he thought it best to hand the documents for George to him.

Mr Eglinton deposed that Mr Charitopoulos again said, “But I’m not George, I’m Pantelis” to which Eglinton said, “Yes, I know you’re Pantelis Charitopoulos. I have an order here for you”. He then separately handed the bundle of documents for George and the 5 May 2006 order to Mr Charitopoulos, who took them and got into a car parked on the property.

Mr Eglinton reiterated in cross‑examination that he handed the 5 May 2006 order to Pantelis Charitopoulos separately, with the words he “had an order for him”. He testified that he would not mix up orders intended for service on different people. He clearly remembered serving the documents separately.

Mr Charitopoulos deposed that on 2 August 2006 he did not receive a copy of the 5 May 2006 order and that Mr Eglinton did not state that he had an order for him. In his affidavit, he deposed that the documents handed to him were contained in an envelope to which he referred several times. At the hearing, he stated that he was unsure about the envelope. He gave no convincing explanation for his altered recollection. I refer to the quality of Mr Charitopoulos’ evidence in detail below.

Mr McNamara deposed that he returned the bundle of documents addressed to George to Middletons.

Mr Eglinton’s affidavit of 11 August 2006 referred to the bundles of documents forwarded by Middletons for service on George Charitopoulos and enumerated the four court documents, but did not refer to the 5 May 2006 order as included in the bundle of documents intended for George. However, the exhibit constituting the documents returned to Middletons by Mr McNamara included a copy of the 5 May 2006 order with a blue stamp on it. Mr Eglinton was unable to explain its presence. He did not notice it at the time. He testified that his copy of the 5 May order, which he served, did not have a blue stamp.

I am unable to determine why a copy of the 5 May 2006 order was included in the bundle addressed to George Charitopoulos and subsequently returned to Middletons. I do not consider, however, that the presence of a copy of the 5 May 2006 order with a blue stamp on it in that bundle detracts from the credibility of Mr Eglinton’s clear and detailed evidence of his separate service of the 5 May 2006 order on Mr Charitopoulos on 2 August 2006.

Mr Eglinton deposed that the man he personally served on 3 August 2005 identified himself as Pantelis Charitopoulos, with whom he had previously dealt with in the course of the proceeding, and had previously personally served.

Credit of Witnesses

Mr Eglinton, Mr Heidt, Mr Hume and Mr Codling gave evidence on behalf of the plaintiffs. They were cross-examined. I considered them to be clear, direct, consistent and credible witnesses. The unexplained factors, occasional lapses of memory or apparent inconsistencies were few, and in any event, minor, and inconsequential to the principal issues.

The defendants did not seek to cross‑examine any other witness who swore an affidavit on behalf of the plaintiffs.

The defendants’ witness were Mr Charitopoulos, Mr McNamara and Mr Dobric. They were cross-examined. I have already referred to the quality of Mr Dobric’s evidence above.

Mr Charitopoulos swore six affidavits. The successive affidavits revealed inconsistencies and material omissions which were misleading. For example, Mr Charitopoulos’ affidavit of 30 August 2006 clearly indicated that he did not accompany Mr Koimtsidis into McNamara’s office, but his affidavit sworn 3 October 2006 acknowledged that he did accompany him. That affidavit was sworn after Mr McNamara’s affidavit, which revealed that Mr Charitopoulos accompanied Mr Koimtsidis.

Mr Charitopoulos’ affidavit indicated that he knew Mr Koimtsidis socially and through business. It did not reveal that, (as ultimately emerged), they were partners engaged in a precious metal operation in Ghana.

The affidavits of Mr Charitopoulos therefore failed to present a full account and appeared to suppress material details.

The affidavits of Mr Charitopoulos contained assertions inconsistent with the affidavit and oral evidence of Mr McNamara. Mr Charitopoulos corrected several significant matters at the outset of his oral evidence. No explanation was proffered for the change of evidence on a number of significant matters at that point.

Mr Charitopoulos’ oral evidence not only contradicted material assertions made in his affidavits, but changed rapidly in the course of cross-examination. It rapidly swung “full circle” from denial to concession on several occasions. While asserting a “crystal clear” memory of matters which served his case, Mr Charitopoulos consistently professed to have no memory of other significant matters, with no convincing explanation for his selective recall.

In his oral testimony, Mr Charitopoulos progressively introduced new assertions on topics which had apparently been comprehensively and differently dealt with in his affidavits.

His oral evidence was retracted, modified or altered, to such an extent, and with such frequency, that it was difficult to present any coherent summary of some aspects of it. It was obfuscating, evasive, inconsistent and, on a number of significant matters, inherently incredible. Having observed him closely, I have concluded that Mr Charitopoulos was not a truthful witness, but was prepared to give false testimony in order to suit his perceived advantage.

In the case of a conflict of evidence, I prefer the evidence of the plaintiffs’ witnesses to that of Mr Charitopoulos. In particular, I prefer the evidence of Mr Eglinton and Mr Heidt in relation to the alleged service on 9 May 2006 and 2 August 2006.

As stated above, Mr Koimtsidis did not attend for cross-examination. The nature of his relationship and the extent of his association with Mr Charitopoulos emerged late, in the context of cross-examination. No reliance can be placed on Mr Koimtsidis’ affidavit.

I accept the evidence of Mr McNamara, the defendants’ lawyer, about the events of the afternoon of 9 May 2006. Although he deposed that he was unable to contact Mr Koimtsidis in Ghana, it would appear that he was not in possession of the information revealed by Mr Charitopoulos during the course of the hearing. In my opinion, it does Mr McNamara little credit that when handed Court documents directed to his client, who was present, he stated that he did not want the documents and recommended their return to the Court or the plaintiffs’ solicitors without any explanation to the client of his obligations.

Conclusion on service on 9 May 2006

I am satisfied, to the requisite standard, that the 5 May 2006 order was served on Pantelis Charitopoulos on 9 May 2006.

For the reasons set out above, I accept the evidence of the witnesses for the plaintiffs and reject the contrary evidence of Mr Charitopoulos. I place no weight on Mr Koimtsidis’ affidavit.

Mr Collinson argued that the hypothesis that Mr Koimtsidis was served on 9 May 2006, rather than Mr Charitopoulos, was reasonably open on the facts, because Mr Koimtsidis was not unlike Mr Charitopoulos in stature and Mr Eglinton had seen the Holden Statesman vehicle parked outside Mr Charitopoulos’ residence early in the morning of 9 May 2006 and saw it near the Harrison Road premises in the afternoon. I am not persuaded that the presence of Mr Koimtsidis’ Holden Statesman outside Mr Charitopoulos’ home at 7.15am and near his Harrison Road business premises in the afternoon constitutes a basis for reasonable doubt that Mr Charitopoulos was not the driver of the vehicle at 3.00pm that afternoon. Mr Koimtsidis is Mr Charitopoulos’ business partner; Mr Heidt, a credible witness, whose evidence I accept, clearly identified Mr Charitopoulos (whom he had seen many times before and who has an unusual identifying feature of a large facial scar), standing in Pirie Street at the time; and where Mr Eglinton, another credible witness, whose evidence I accept, clearly identified him by the description and the facial scar, identified him the following day and subsequently confirmed the identification from a newspaper photograph. I accept that Messrs Codling and Eglinton gave a truthful and accurate account of the conversation with Mr Charitopoulos on 10 May 2006. Mr Charitopoulos’ response to the questions “Are you Pantelis today?” to the effect that “yes and I was I Pantelis yesterday” constitutes, in the context, an implicit acknowledgement that he was served on 9 May 2006. That circumstance fortifies, but is unnecessary to, my conclusion that the 5 May 2006 order was served on Mr Charitopoulos on 9 May 2006..

Conclusion on service on 2 August 2006

I am also satisfied, to the requisite standard, that the 5 May 2006 order was served on Mr Charitopoulos on 2 August 2006. I accept the evidence of Mr Eglinton and reject that of Mr Charitopoulos. I do not consider that the presence of a copy of the 5 May 2006 order in the bundle of documents returned by Mr Charitopoulos’ lawyer to Middletons, is a basis for reasonable doubt that Mr Eglinton, on 2 August 2006, served the 5 May 2006 order separately on Mr Charitopoulos, as he testified.

Conclusion on Contempt of 5 May 2006 order

The plaintiff bears the onus of establishing each element of the charge of contempt beyond reasonable doubt.

I am satisfied, to the requisite standard, that the necessary elements have been established in relation to the 5 May 2006 order.

The 5 May 2006 order was made by the Court.

Its terms were clear, unambiguous and capable of compliance.

The 5 May 2005 order was served on Mr Charitopoulos on 9 May 2006 and 2 August 2006.

I am satisfied that Mr Charitopoulos had knowledge of the terms of the 5 May 2006 order.

I am satisfied that the order was breached. No vehicles or other assets were delivered up to the plaintiffs and no affidavit was filed within 72 hours of service.

I consider that the breach of the 5 May 2006 order is continuing. The terms of order 1 of the 5 May 2006 order require, in unqualified terms, the delivery up of all the removed assets, and order 2 additionally requires (if a vehicle listed in the Schedule is no longer within the possession or control of the defendants), the filing and service of affidavits in relation to those listed vehicles. The affidavits filed in relation to the assets removed on 2 May 2006 but not delivered up falsely indicate that the relevant assets are not within the possession or control of Haritopoulos, by reason of the sale agreement with Booze2U. I am satisfied, to the requisite standard, that Mr Charitopoulos has continued to control and use the outstanding vans and assets for his own purposes, unimpeded by the sale agreement with Booze2U. I am satisfied to the requisite standard, that the sale to Booze2U does not constitute an impediment to the defendants’ possession and control of the relevant vehicles and other assets.

The plaintiffs contend that the unrecovered assets are valued at approximately $109,000. The defendants have tendered a cheque for $72,549 for all the outstanding vehicles save for one which did not sell at auction. The value of that vehicle is disputed. The plaintiffs value it at $36,000 while the defendants contend that, by reference to comparable vehicles, its value is much less.

Due to the dispute, the plaintiffs have not accepted the tender of the $72,549.60.

The tender of funds, even of an agreed amount, does not constitute compliance with the 5 May 2006 order. In my opinion, it is inappropriate to determine the dispute over the value of the outstanding vehicles in the context of the present application.

I conclude that the defendants committed a contempt of the 5 May 2006 order.

The defendants, through their counsel, indicated that they had placed all material relevant to sentence before the Court and did not seek an opportunity to make further submissions in the event that the Court concluded that they were guilty of contempt of the 5 May 2006 order, which was endorsed in accordance with r.66.10(3) of the Supreme Court Rules.

In Forge v ASIC[42], McColl JA emphasised that where, as in the present application, the sentencing process of a criminal trial is effectively invoked, a tribunal has a duty to hear a person found guilty on the question of penalty. Her Honour referred to Hutley JA’s recognition in Hall v New South Wales Trotting Club Ltd,[43] that persons found guilty cannot meaningfully address on sentence until informed of what they have been found guilty. She endorsed Hutley JA’s view that it was incumbent, in effect, upon the tribunal to draw the right to the person’s attention.[44]
[42](2004) 52 ACSR 1 at [409]-[428].
[43][1977] 1 NSWLR 378 at 382-3.
[44](2004) 52 ACSR 1 at [425].

In Forge, the primary judge had found that the appellants had contravened provisions of the Corporations Law. He disqualified them from managing corporations for certain periods and imposed pecuniary penalties. McColl JA observed that it was “incumbent upon the primary judge to approach the determination of the contravention issue and penalty in the two-stage process dictated by Hall v New South Wales Trotting Club Ltd. He should also have drawn the appellants’ attention to their right to elicit evidence and make submissions on the issue of penalty.”[45]
[45](2005) 52 ACSR 1 at [425].

I therefore consider that in the present case, the defendants should have the opportunity to elicit further evidence and make submissions in relation to penalty.

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CERTIFICATE

I certify that the 85 preceding pages are a true copy of the reasons for Judgment of Dodds-Streeton of the Supreme Court of Victoria delivered on 9 February 2007.
DATED this ninth day of February 2007.

Associate