Testel Aust P/L v Rickard (No 3) - [2018] SADC 61

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
TESTEL AUST P/L v RICKARD & ORS (No 3)
[2018] SADC 61
Decision of His Honour Judge Chivell
13 June 2018
COURTS AND JUDGES - CONTEMPT - PARTICULAR CONTEMPTS - INTERFERENCE WITH COURSE OF JUSTICE AND ADMINISTRATION OF LAW - PREJUDICING TRIAL OF CIVIL ACTION
Application by plaintiff that first defendant be charged with contempt of court in relation to pre-trial behaviour in (1) transferring relevant evidence in a computer file to the recycle bin of a computer and (2) making a false deposition in an affidavit. Whether there are reasonable grounds to suspect the first defendant of the alleged contempt.
Held: Reasonable grounds to suspect the first defendant of contempt of court in relation to (1), but not in relation to (2).
District Court Civil Rules 2006 (SA) r 303; Testel Aust P/L v Rickard & Ors [2017] SADC 31; Mane Market Pty Ltd & Ors v Temple [1998] SASC S6986; Mane Market Pty Ltd & Ors v Temple and Southern Hotels Pty Ltd [1999] SASC 271; McDonald v State of South Australia [2008] SASC 309; Mirus Australia Pty Ltd v Gage [2017] NSWSC 1046; Witham v Holloway (1995) 183 CLR 525; Lane v The Registrar of the Supreme Court of New South Wales (Equity Division) [1981] HCA 35, (1981) 148 CLR 245; Coward v Stapleton (1953) 90 CLR 573; Keeley v Brooking (1978-1979) 143 CLR 162; Stec & Anor v Electro Research International Pty Ltd & Ors Unreported, SA Supreme Court, 1997, BC9703493, referred to.

TESTEL AUST P/L v RICKARD & ORS (No 3)
[2018] SADC 61

This is an application pursuant to r 303(1) of the District Court Civil Rules 2006 that Mr Rickard be charged with contempt of court.
The application arises out of litigation between Testel Australia Pty Ltd as plaintiff and Mr Rickard, Mr Wilson and Active Safety Services Pty Ltd as first, second and third defendants respectively. I gave judgment in favour of the plaintiff on 7 April 2017.[1]
[1] [2017] SADC 31.
Testel now alleges that on 5 February 2014 and 29 April 2015, Mr Rickard committed two acts which were in contempt of court.
The proceedings were commenced in 2013. The trial commenced on 12 November 2015, so the relevant events occurred during the interlocutory phase of the litigation.
In brief summary, the acts said to constitute a contempt of court were:
1.On 5 February 2014, Mr Rickard moved a folder entitled ‘Active’ to the recycle bin on a computer being used in the course of business of Active. The folder contained evidence which was relevant to the litigation, and Mr Rickard’s actions were motivated by a desire to conceal the evidence from the plaintiff and prevent it from coming to the knowledge of the plaintiff by way of disclosure.
2.On 29 April 2015, Mr Rickard falsely deposed in an affidavit that a receipt which was exhibited to the affidavit was a receipt issued in 2011 when a motor vehicle was purchased. It is alleged that Mr Rickard knew that the receipt was only drawn up in 2015 at his request, and contained information which was not genuine.
DCR 303(4) and (5) set out the procedure to be adapted when this power is invoked:
(4) If the Court is satisfied on an application under this rule that there are reasonable grounds to suspect the accused of the alleged contempt, subject to subrule (7), the Court may require the Registrar to formulate a written charge containing reasonable details of the alleged contempt.
(5) The Registrar will then issue a summons requiring the accused to appear before the Court at a nominated time and place to answer the charge.
The phrase ‘reasonable grounds to suspect’ has been the subject of much judicial consideration over the years, particularly in the context of the criminal law. The phrase, or versions of it, is often used in statutes dealing with the power to search and the power to arrest. In the present context, the phrase was examined by the Supreme Court in Mane Market Pty Ltd & Ors v Temple[2] and Mane Market Pty Ltd & Ors v Temple and Southern Hotels Pty Ltd.[3]
[2] [1998] SASC S6986.
[3] [1999] SASC 271.
In Mane Market v Temple, Debelle J said:[4]
To make an order that a Registrar’s summons should issue, the court must be satisfied that there is sufficient evidence which, if accepted, would prove the contempt. When determining whether there is sufficient evidence, it must be remembered that there is no longer any distinction between civil and criminal contempts. All contempts should be punished as if they are quasi-criminal in character: Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 109, and the burden of proof in civil proceedings is proof beyond reasonable doubt: Witham v Holloway (1995) 131 ALR 401.
Debelle J added:[5]
Thus, when considering whether there is a prima facie case to warrant the issue of a Registrar’s summons, it is not the role of the judge hearing the application to choose between the inferences which may be fairly open to the judge who hears the summons. Instead, the judge must decide the question on the basis that the judge hearing the summons will draw such of the inferences which are reasonably open as are most favourable to the party seeking the issue of the Registrar’s summons: cf R v Bilick (1984) 36 SASR 321; Questions of Law Reserved on Acquittal (No 2 of 1993) (1993) 61 SASR 1, 5.
[4] At [5].
[5] At [17].
In Mane Market v Temple and Southern Hotels, Wicks J agreed with this analysis.[6]
[6] At [14].
In McDonald v State of South Australia, Sulan J added:[7]
In considering whether to direct the Registrar to issue a summons, the Court should have regard, not only to whether a prima facie case of contempt has been made out, but also to all the circumstances giving rise to the referral of the matter. If a judge concludes that the breach is trivial, or if there are good reasons why the matter should not be referred to the Registrar to commence contempt proceedings, the judge has a discretion to decline to refer the matter. Factors including the reasons for the misconduct, the seriousness of such misconduct, and the personal circumstances of the person are relevant factors.
At [17], Sulan J held that Mr McDonald’s actions were not ‘contumacious’. This is somewhat at odds with Debelle J’s observations at [6] in Mane Market v Temple:
It is not appropriate at this stage to determine whether the breach is contumacious. There are two reasons for that conclusion. The first is that it is necessary for the court to determine no more than whether there is sufficient evidence which, if accepted, would prove the contempt. Secondly, the plaintiffs have given notice that they seek to cross-examine the defendant. There is a real dispute whether the defendant’s breach was inadvertent.
There was no such application to cross-examine Mr McDonald before Sulan J in McDonald. What is clear is that even if the court decides that there are reasonable grounds to suspect that a contempt has occurred, there is a residual discretion to decline to direct the Registrar to commence the proceedings.
[7] [2008] SASC 309 at [16].
In Mirus Australia Pty Ltd v Gage,[8] Ward CJ in Equity outlined in detail the elements of criminal contempt and the principles which are to be applied at the hearing of the charge. In that case, his Honour indicated[9] that the distinction between civil and criminal contempt had not be abolished, contrary to Debelle J’s observations in Mane Market quoted above. In New South Wales, however, the distinction is recognised by statute, and ‘particular appellate consequences flow from classification’.
[8] [2017] NSWSC 1046.
[9] At [116].
The distinction between civil and criminal contempt was described by the High Court in Witham v Holloway,[10] quoted in Mirus at [116]:
… a civil contempt involves disobedience to a court order or breach of an undertaking in civil proceedings, whereas a criminal contempt is committed either where there is a contempt in the face of the court or there is an interference with the course of justice.
There was no dispute that the allegations in this case are in the nature of a criminal contempt. If established, they would constitute an interference with the course of justice.
[10] (1995) 183 CLR 525.
Ward CJ extracted[11] the following principles to be applied in such cases:
[11] From [117].
·the precise elements of criminal contempt vary with the nature of the contempt alleged;
·the law is typically expounded by reference to general categories of behaviour, though such categories are not closed;
·the essence of a contempt in the nature of an interference with the course of justice is ‘action or inaction amounting to an interference with, or obstruction to, or having a tendency to interfere with or obstruct the due administration of justice, using that term in a broad sense’, quoting Lane v The Registrar of the Supreme Court of New South Wales (Equity Division);[12]
·there must be an intention on the part of the alleged contemnor to do something which is likely to interfere with the course of justice;
·there must have been an intentional act which was calculated to interfere with the course of justice: the mere fact that the conduct had that effect is not sufficient;
·the burden of proof rests on the party alleging contempt of court;
·each element of the charge must be proved beyond reasonable doubt;
·the charge must be distinctly stated, and the accused is entitled to insist that he or she is only required to meet the charge as made;
·an accused contemnor has the right to silence and a privilege against self-incrimination;
·as in criminal proceedings, there is little if any scope for Jones v Dunkel inferences to be drawn in contempt proceedings.
[12] (1981) 148 CLR 245; [1981] HCA 35 at [8].
The First Allegation
In short summary, the background to the first allegation, that Mr Rickard moved a folder entitled ‘Active’ to the recycle bin of an Active computer, is as follows:
·Testel granted a franchise in its electrical testing business to Mr Rickard’s company, T & T Rickard Pty Ltd (T&T), in 2004. The grant was for three years and was renewed twice;
·T&T repudiated the franchise agreement in 2011. A restraint covenant in the deed continued to be enforceable subsequent to the repudiation;
·Testel’s case against Mr Rickard was that he was breaching the restraint covenant by assisting his friend, Rowan Wilson, to establish Active to operate in competition with Testel, and by performing work for Active, including administrative work on Active’s computers;
·on 3 June 2015, his Honour Judge Barrett of this Court made orders on an ex parte basis, on the application of Testel, authorising the entry, search and removal of property from Mr and Mrs Rickard’s residence at Port Noarlunga and Mr Wilson’s property at Moana. The search took place on 5 June 2015. The search party included Mr du Plessis, an independent computer expert. A number of pieces of computer equipment were seized in the search;
·the laptop computer on which the Active folder was transferred to the recycle bin belonged to Mr Rickard’s wife. The computer which was used by Active in the ordinary course of business was out of action as it was being upgraded. The Active folder, which contained all of Active’s computer files, was transferred to Mrs Rickard’s computer in the meantime;
·the forensic examination of Mrs Rickard’s computer which was conducted by Mr du Plessis revealed the presence of the Active folder;
·the mere presence of the Active folder on Mrs Rickard’s computer was relevant in itself – it went to the extent to which Mr Rickard was actively participating in Active’s business during the restraint period. However, the contents of the folder uncovered by Mr du Plessis were also highly relevant to the issues in the litigation. My analysis of these issues is at [369]-[393] of the reasons for judgment;
·Mr Rickard moved the Active folder to the recycle bin on 5 February 2014 at 9 a.m. by pressing the ‘delete’ button on Mrs Rickard’s computer;
·on the previous day, 4 February 2014, Master Rice of this Court had ordered that the parties to the litigation make disclosure of documents to each other. Testel accepted that this order had not been communicated to Mr Rickard by the time he pressed ‘delete’ on the computer. In fact, it was communicated by his solicitor at 5.11 p.m. on 4 February 2014;
·I made the following findings about this apparent coincidence:[13]
401     Clearly, Mr Bruce and Mr Rickard had spoken that morning on the telephone, but Testel’s concession means that this was after Mr Rickard had deleted the folder.
402     I have no doubt that Mr Rickard would have known that a mutual disclosure order was likely, at least at some stage of the litigation.
403     Even if he did not know about the Master’s order, it is an extraordinary coincidence that Mr Rickard deleted this folder during the litigation at all, let alone that he did so the day after the Master’s order.
[13] [2017] SADC 31 at [401]-[403].
The further point to [403] is that the Active folder was not disclosed in the List of Documents filed on 12 March 2014 (FDN 16) even though it was possible to retrieve it from the recycle bin. The List of Documents was filed only just over a month after Mr Rickard moved the Active file to the recycle bin, where it remained until discovered by Mr du Plessis.
Another point is that there is evidence[14] that Mr Rickard sent a text message to his solicitor, Mr Bruce, less than an hour after deleting the Active folder, and at 12 noon that day attended an appointment with him to discuss the case[15], and yet he failed to advise Mr Bruce of his actions so soon after he had moved the file.
[14] Exhibit CAB 43 to Eleventh Affidavit of Christopher Andrew Bruce (FDN 179).
[15] Ibid, Exhibit CAB 44 & 45.
On 29 April 2015, Mr Rickard verified his disclosure on affirmation[16] and again did not mention the Active folder.
[16] Second Affidavit of Troy Rickard (FDN 62).
Mr Dal Cin, appearing for Testel, referred to Lane v The Registrar of the Supreme Court of New South Wales (Equity Division), in which the court said:[17]
… it is no contempt to tell a person, correctly, that he is not obliged to produce a particular document, even if the person giving the advice has an interest that it be accepted. Such a situation cannot be compared with cases in which a person keeps a material witness out of the way to avoid service of a subpoena (see Clements v. Williams), or attempts to dissuade someone intending, but not bound, to give evidence in a criminal matter from doing so (see R. v. Carroll), or destroys a document which he knows may be required to be produced. In such cases the act done is likely to interfere with the course of justice.
(Citations omitted)
[17] (1981) 148 CLR 245 at 257-8.
It was submitted by Mr Munt, for Mr Rickard, that Mr Rickard did not destroy the document, it remained in the recycle bin until it was recovered. At [384] of my reasons, I concluded:
I accept Mr Dal Cin’s submission. I conclude that Mr Rickard deleted that file from Mrs Rickard’s computer because he knew of its forensic significance in Testel’s case that he had appropriated its confidential documents, and that he was working for Active during the restraint period. His denials of this were untrue, and reflect poorly on his credibility.
Clearly, the inference is available that Mr Rickard ‘deleted’ the Active folder, by which process it went to the recycle bin, in order to hide its forensic significance from Testel. It is true that he did not thereby destroy the file. However, his actions were analogous with one of the scenarios described by the High Court in Lane, also at page 258:
It was submitted on behalf of the respondent that conduct otherwise lawful can amount to a contempt of court if done with a particular intention. That is correct, but the intention must be to do something likely to interfere with the course of justice. Thus it may be lawful for one man to advise another to take a holiday in Brazil, but the giving of the advice may constitute a contempt of court if the advice is given for the purpose of keeping the witness out of the way to avoid service of a subpoena. It may be lawful to dismiss a servant or to deprive a man of his office in a trade union, but if this is done for the purpose of punishing him for having given evidence it is a contempt of court: Rowden v Universities Co-operative Association Ltd.; Attorney-General v Butterworth. In those cases, the purpose, intention or motive of the act was to do the very thing that would interfere with the course of justice — to keep the witness out of the way or to victimize the witness. The words “purpose”, “motive”, “object” and “intention” are used interchangeably in the judgments in Attorney-General v Butterworth and it is quite unnecessary for present purposes to distinguish between them; we shall use the word “intention” to cover motive as well. An intention to interfere with the administration of justice is not necessary to constitute a contempt; the critical question is whether the act is likely to have that effect, but the intention with which the act was done is relevant and sometimes important (Attorney-General v Butterworth; John Fairfax & Sons Pty Ltd v McRae).
(Citations omitted)
Clearly, on my finding at [384], Mr Rickard was keeping the Active folder ‘out of the way’ because of its forensic significance. This was an intentional act. It was likely to interfere with the course of justice. I reject Mr Munt’s submissions to the contrary.
I find that there are reasonable grounds to suspect that Mr Rickard has committed a contempt of court in the manner described in paragraph 1.1 of the application FDN 207.
The Second Allegation
The second allegation is that Mr Rickard made a false statement in an affidavit affirmed on 29 April 2015.
In a letter dated 23 March 2015,[18] Testel’s solicitors advised that they proposed to apply to amend the Statement of Claim[19] to add a reference to additional facts which it alleged were evidence that Mr Rickard was actively participating in the management of Active. The first alleged fact was that on 20 April 2011, Mr Rickard withdrew $1,500 in cash from the account of T&T in order to provide capital for the establishment of Active. The second alleged fact was that Mr Rickard caused T&T to pay the cost of incorporating Active by transferring $1,050 to a firm of accountants on 9 April 2011.
[18] Exhibit RDT-5 to Fourth Affidavit of Richard Dunstone Townsend sworn 25.3.15.
[19] At [35.4(iv)(aa)].
Mr Rickard’s explanation for the withdrawal was that he used the money to buy a car. In his affidavit affirmed on 29 April 2015, Mr Rickard deposed that the $1,500 he withdrew from the bank was part of the $3,500 cash payment to Gurney’s Cheaper Cars on 21 April 2011,[20] and that a receipt which was part of Exhibit TR3 to the affidavit related to the purchase.
[20] Second Affidavit of Troy Rickard (FDN 62) at [52].
The receipt was not genuine.[21] It was obtained from Gurneys by Mr Rickard in 2015 by telling Gurneys’ manager that he had lost the original receipt, and dictating the terms of the replacement to him. The ‘receipt’ was dated 21 April 2011. This date was significant.
[21] [2017] SADC 31 at [260].
The genuine receipt was found in the search of Mr Rickard’s premises on 5 June 2015. It was dated 18 April 2011. The evidence established that Mr Rickard bought the vehicle, and paid the $3,500, on 18 April 2011, two days before the bank withdrawal on 20 April 2011. This contradicted Mr Rickard’s evidence that he used the $1,500 to buy the car and led to a finding in my reasons that he paid the $1,500 into Active’s account as starting capital, along with a matching payment by Mr Wilson.

This was a ‘strong piece of circumstantial evidence that the two men were acting in concert as principals to set up Active to take over the FMC work from Testel’.[22] This was a clear breach of the restraint clause in the franchise deed, which Mr Rickard was attempting to hide with his fabricated story about the car.
[22] [2017] SADC 31 at [267].
Mr Munt submitted that there can be no prima facie case of contempt arising from such allegations, citing Coward v Stapleton[23] and Keeley v Brooking.[24] In Coward, Williams ACJ and Kitto and Windeyer JJ said:[25]
There must be a manifestation in some form of an intention on the part of the witness not to give a real answer. It is essential not to lose sight of the sharp distinction that exists between a false answer and no answer at all. Of course a purported answer may be so palpably false as to indicate that the witness is merely fobbing off the question. His attitude in the box may show that he is simply trifling with the court and is making no serious attempt to give an answer that is worth calling an answer. In such cases it may well be right to say that the witness refuses to answer the question, but it cannot be too clearly recognized that the remedy for giving answers which are false is normally a prosecution for perjury or false swearing, and not a summary committal for contempt. Such a committal can be justified only by a specific finding of an evinced intention to leave a question or questions unanswered, or by a finding of contempt in some other defined respect.
[23] (1953) 90 CLR 573.
[24] (1978-1979) 143 CLR 162 at 170.
[25] At 578-9.
In Keeley, Mason and Aitkin JJ, with whom Stephen J agreed, said:[26]
In our opinion the judgment in Coward v. Stapleton correctly states the law. The principle which it enunciates is in conformity with the approach which has been taken in the United States. There it has been acknowledged that, although false swearing constitutes perjury, if it is apparent from the false testimony that there is a refusal to give information, then there is an obstruction of the administration of justice which is punishable as a contempt (Collins v. United States). Testimony false and evasive on its face is the equivalent of refusing to testify at all (Richardson v. United States; Ex parte Hudgings).
It follows that the learned judge in the present case correctly applied the principle enunciated in Coward v. Stapleton when he held that “a witness is guilty of contempt if by his false assertion of inability to remember he deliberately evades questions and so obstructs the administration of justice”.
(Citations omitted)
[26] At 179.
Mr Munt also referred to the judgment of Duggan J in Stec & Anor v Electro Research International Pty Ltd & Ors,[27] in which his Honour said:
In most instances it is alleged that in the matters heard previously an attempt was made during the proceedings to mislead the court by the presentation of false information. The effect of some of the assertions is that perjury was committed. In other instances the effect is to allege attempts to pervert the course of justice.
In both instances, however, it is quite inappropriate that the allegations should be dealt with by way of proceedings for contempt. Contempt proceedings are appropriate in a case where a person refuses to answer questions but if it is alleged that simple perjury has taken place the allegation should not be dealt with by way of summary proceedings for contempt. This is evident from the joint judgment of the High Court in Coward v Stapleton (1953) 90 CLR 573 at 578.
[27] Unreported, SA Supreme Court, 1997, BC9703493.
Mr Dal Cin submitted in reply that Mr Rickard’s evidence went beyond mere perjury, and was ‘part of wider course of conduct the object of which was to interfere with the proceeding’.[28] That may be so, but that does not take the behaviour beyond what any case of alleged perjury might involve.
[28] T 49.
I uphold Mr Munt’s submission as to the second allegation, and hold that even if a false deposition in the affidavit is proved beyond reasonable doubt, that could not give rise to a case to answer on a charge of contempt of court.
I therefore find, for the purposes of DCR 303(4), that I have no reasonable grounds to suspect that Mr Rickard has committed a contempt of the Court in the manner described in paragraph 1.2 of the application FDN 207.
I will hear the parties as to any consequential orders, in particular as to whether the procedure in DCR 303(7) should be adopted in relation to my finding as to paragraph 1.1 of the application FDN 207.