TJ and MB Waugh Pty Ltd v Seeber - [2002] WASC 170

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: TJ & MB WAUGH PTY LTD -v- SEEBER [2002] WASC 170

CORAM: EM HEENAN J

HEARD: 18 JUNE 2002

DELIVERED : 18 JUNE 2002

FILE NO/S: CIV 1548 of 2000

BETWEEN: TJ & MB WAUGH PTY LTD (ACN 062 164 184)
Plaintiff
AND
DERRICK DAVID SEEBER
Defendant
JOSEPH ANTHONY SCURRIA
Third Party

Catchwords:

Contempt of court - Motion to punish for breach of undertaking - Uncertainty over scope of undertaking - Conduct complained of outside the scope of breach of duty alleged in pleadings or in application for injunction - Motion dismissed - No breach established on facts

Legislation:

Nil

Result:

Motion dismissed

Category: B

Representation:

Counsel:

Plaintiff:     Mr J C Vaughan
Defendant:     Mr N Marsh
Third Party                   :     No appearance

Solicitors:

Plaintiff:     Freehills
Defendant:     J Penny & Associates
Third Party                   :     Pynt McKay

Case(s) referred to in judgment(s):

Nil

Case(s) also cited:

Australian Competition and Consumer Commission v Hughes [2001] FCA 38
Enfield London Borough Council v Mahoney [1983] 2 All ER 901
Jendell Australia Pty Ltd v Kesby [1983] 1 NSWLR 127

EM HEENAN J: There is before the Court a notice of motion for punishment of Derrick David Seeber for an alleged contempt of court. The application is brought by notice of motion dated 27 February this year. The specified details of the alleged contempt are set out in the notice accompanying that motion and run to five paragraphs. The motion is supported on behalf of the applicant/plaintiff by a series of affidavits that were tendered during the hearing today. Some of the deponents attended and were cross‑examined.
There is a denial of the alleged contempt and the defendant has given evidence by affidavit attempting to justify his conduct and has been cross‑examined. A further witness has also given affidavit evidence for the defendant and has also been cross-examined. In order to appreciate the substance of the allegations in support of the motion for contempt and the explanation given in answer to them it is necessary to examine the principal proceedings of which these form part.
In an action in this court commenced in the year 2000 TJ & MB Waugh Pty Ltd brought proceedings against the defendant, Derrick David Seeber, seeking a declaration that the purported termination of a certain licence agreement by him was invalid, that that company as plaintiff was entitled to re‑enter the property which is the subject of the licence and for other declarations about the duration of the licence and the existence of rights pursuant to it. In addition, the plaintiff sought damages and accounts for alleged wrongful conversion and an injunction.
That action has attracted a defence and a counterclaim and it is necessary to say something more about the basic facts. The defendant, Derrick David Seeber, is the registered proprietor of an estate in fee simple of some unimproved bush land near Boyup Brook. That land has on it a quarry or a pit from which a decorative stone known as riverstone, which is used in domestic gardens and house improvements, can be retrieved. That stone has market value in the metropolitan region and other areas.
Under an agreement, somewhat doubtfully named a licence agreement, made 11 June 1996, the defendant granted a licence over this property to the plaintiff. It is that licence which is the subject of the principal proceedings. Under the terms of the licence the plaintiff, the licensee, was entitled to enter upon certain specified land and to remove stone, shale, and other materials.
The property which is the subject of the licence is described as Nelson location 8533 and being the whole of the land in Certificate of Title Volume 1137 Folio 998. The area which is the subject of the licence is defined as "the pit" which is located within Nelson location 8533. Unfortunately, the evidence before the Court does not allow the location of that pit to be plotted precisely within location 8533 but nothing now turns on that.
It is not necessary to state all the terms of the licence agreement. Essentially, the plaintiff is entitled to enter on the land and remove rock, riverstone and other material in return for the payment of a fee. There is a flat fee of $500 per annum, payable in advance plus a proportional fee of $10 per tonne of material removed, payable monthly in arrears. There is a mechanism provided in the agreement for records to be kept by the licensee as to the tonnage of material removed, no doubt in order to calculate the consideration which is payable. One of the ways in which that is to be calculated is by keeping weighbridge records for trucks of material which has been removed from the property.
This obligation and the measure of fees payable for material removed from the property has generated a dispute. The licence agreement is a document prepared by solicitors. It is lengthy and formal in its terms. Although I spoke somewhat slightingly of its title as a licence agreement that is only because it appears to confer more rights than one would generally expect in a mere licence. It is not necessary to characterise the nature of this agreement fully today and it is perhaps inappropriate to do so because that may need to be done eventually in the principal proceedings. It is enough to say that the licence agreement more closely resembles the grant of a profit a prendre enabling the licensee to come onto the land, excavate soil and remove it in return for the payment of consideration calculable by reference to the volume of material removed. That being so it is arguable that it confers a species of a proprietary interest in the land which is the subject of the licence.
It is perhaps important to appreciate this because the licence agreement contains a clause entitling the licensee to lodge a caveat in respect of the rights which the licensee enjoys under the agreement. I pause simply to make the observation that, in view of the recognition of a right to caveat, one would expect any proprietary right which is conferred by the document to be precisely and readily recognisable. The appearances are that the rights are confined to the land which is the subject of Nelson location 8533, indeed, there is nothing express in the agreement to suggest otherwise. In the situation which has emerged in fact during the life of the licence agreement, a dispute has arisen between the plaintiff, as licensee, and Mr Seeber, as landowner and licensor, about the payment of consideration for the materials removed pursuant to the rights conferred by the licence.
On examination of the pleadings this seems to come down to an issue over whether or not the plaintiff has kept adequate records, and in particular weighbridge records, of the volume and weight of material removed pursuant to the licence. There is an allegation made by the landowner and defendant, Mr Seeber, that that has not been done. There are counter allegations by the plaintiff, as licensee, that it is not necessary to keep comprehensive records; and that the landowner is not entitled to have access to all the weighbridge records. Whatever the real position may be, there have been, at least in a number of instances which the plaintiff contends are few, failures to keep and disclose those records.
In those circumstances the defendant has purported to terminate the licence agreement for breach and has attempted to exclude the licensee from further entry upon the premises. The plaintiff contends that there has been no breach, that the defendant has not been entitled to terminate the licence agreement, and even if he had been, that he has not effectively done so according to the procedures required in the agreement itself to be followed in the event of a default. The plaintiff contends that the agreement remains on foot and that it is entitled to continue to exercise the extractive rights and to collect materials from the land.
In those circumstances the plaintiff issued this writ and delivered an amended statement of claim dated 19 July 2000 asserting, generally, the rights which I have described in a summary way. This has attracted a defence and counterclaim asserting that the licence agreement has been validly terminated and that the defendant landlord was entitled to put an end to the licence. The plaintiff, claiming to be wrongfully excluded from the land, seeks injunctions, orders and declarations entitling him to return and to continue to exercise those rights, together with a claim for damages and accounts for losses said to have been sustained from the wrongful exclusion.
The defendant on the other hand brings the counterclaim seeking declarations that the licence has been validly terminated and claims damages and accounts for the value of all of the stones and other materials wrongfully taken from the land after the termination. In this state of affairs, or perhaps before the defence and counterclaim were filed, the plaintiff brought an application for an interlocutory injunction seeking an order restraining the defendant from removing, quarrying or selling riverstone and other products coming from the land.
It is at this point necessary to examine a little more closely some of the allegations asserted by the plaintiff in its statement of claim. I have already mentioned that the licence by its express terms, is confined to the land which is the Nelson location 8533. However, by par 6 of the amended statement of claim, the plaintiff alleges that it is an express or alternatively an implied term of the licence that, during the term of the licence, the defendant would not excavate or remove shale, gravel or riverstone from the property or any other property owned by the defendant.
It is the alleged extension of the obligation to any other property which becomes significant. It is to be noticed that the obligation asserted by this implied term not only extends to any other property owned by the defendant but that it would, in effect, put the plaintiff in a position where he could extract and exploit the shale, gravel and riverstone derived from Nelson location 8533 free of any competition in that business whatever from the defendant derived from materials coming from any of his properties. Whether or not such a term should be implied in such a contract is likely to be a matter of major controversy in the principal proceedings.
The defendant has denied the existence of any such implied term by its defence. Having regard to the well‑known criteria which need to be established before a term should be implied in a contract, it is perhaps enough to say that the plaintiff faces a heavy burden in demonstrating that an implied term to the effect alleged exists in this contract. In the amended statement of claim there is an allegation in par 14 that in breach of this implied term the defendant has commenced quarrying and excavating shale, gravel and riverstone from another pit on the property.
Paragraph 15 goes on to allege that the defendant has removed and sold the shale and gravel removed from the new pit. Particulars are to be delivered, (none have yet arrived), that gravel, shale and riverstone have been removed from the pit and sold. Although, I note, the particulars proposed would seem to extend beyond the allegation in par 15 itself. It is clear from the pleadings that the allegations in relation to the removal and sale of shale and gravel and perhaps riverstone from the new pit are made in a setting where it is alleged that the new pit is on Nelson location 8533.
When the plaintiff came to apply for an interlocutory injunction an affidavit was filed in support of the application which again asserted that there was a breach of the implied term by the sale and exploitation of shale, gravel and riverstone from the new pit and in terms which made it clear that the allegation was being made on the footing that the new pit was part of the same original location. When the application for the interlocutory injunction was pending and before it came on for final disposition, an undertaking was offered by the defendant then represented by solicitors. This was accepted and the application for the injunction was not pursued. The undertaking which was given is, in terms, as follows:
"I Derrick David Seeber the defendant herein hereby undertake to this Honourable Court that I will not, until further order,
(a)quarry any riverstone from the property owned by me (my property), or
(b)sell any of riverstone quarried from my property, or
(c)permit any person to quarry riverstone from my property."
Dated 12 February 2001 and signed by the defendant.
It is the allegation of the plaintiff on the motion presently before the Court that there have been breaches of this undertaking by the defendant in January and February this year by the defendant quarrying riverstone from the new pit and selling or delivering this riverstone to a customer who lives in the Perth metropolitan area. The evidence in support of these allegations is contained in the three affidavits of Mr Waugh which have been read and relied upon. There are dated, respectively, 23 November 2000, 30 January 2001 and 20 February 2002. There are also the affidavit of Mr Conzelmann of 4 April 2002, the affidavit of Mrs Kelly of 20 February 2002 and two affidavits of Ms RD Fairweather dated 26 February and 27 March 2002.
It appears, however, that the new pit is not on Nelson location 8533 and that the activities which are the subject of the injunction application in fact relate to alleged activities in respect of another pit located on a different location owned by the defendant - namely Nelson location 13019 which is to the North West of location 8533 some one kilometre away and non‑adjacent. It seems that there has been some mistake by the plaintiff dating from the statement of claim and continuing through the application for the injunction in believing that the new pit was on Nelson location 8533. It follows from this that to sustain a claim for any rights or activities on Nelson location 13019, the plaintiff will need to make good the existence of the implied term which is alleged in par 6 of the statement of claim.
However, the plaintiff did not seek to do that in the application for the injunction, perhaps due to the error which I have already mentioned. This creates an issue as to what is the proper meaning and scope of the terms of the undertaking which was given by the defendant on 12 February. There can be no doubt that the undertaking in express terms, par 1(a) is that:
"The defendant will not until further order quarry any riverstone from any property owned by me."
The question is what does that mean in the present setting? In my opinion on an application for orders for committal or other penal action for an alleged contempt of court the documents before the court should be given a strict meaning and allegations strictly proved to the higher standard of proof.
Accordingly, if there is any ambiguity or doubt as to the meaning of the undertaking it should be examined in the circumstances in which it was given. The circumstances in which this undertaking was given appear to me to be a situation in which the defendant was facing an application for an injunction to restrain his activities on Nelson location 8533 alone. Further, it is my view that that is a good reason to read down the undertaking in relation to activities on that land.
When that possible construction of the document was put to counsel for the plaintiff he pointed out that the terms of the undertaking appeared to be wide, that there was an allegation in the statement of claim that there was a restraint on what I will call, for convenience, competition by the defendant which extended to all other properties he owned, notwithstanding the absence of any express term to that effect. Counsel pointed out that there was subsequent correspondence between the solicitors for the parties which suggests that there was a realisation that different views were being taken as to the scope of the undertaking. The plaintiff submitted that all of this should lead me to treat the undertaking as extending, as its words say, to any property whatever owned by the defendant, notwithstanding the limited score of the claim for breach in the amended statement of claim; in the application for the injunction and in the description contained in the licence itself.
It is certainly the case that on an application for the exercise of the contempt power by the court to enforce undertakings, the courts will take a strict view. In the Supreme Court Practice, the "White Book", at par 52/1/4 it is said that:
"In order to establish a contempt of court by a party sufficient to prove that his conduct is intentional and that he knows all the facts which make it a breach of the undertaking or order it is not necessary to prove that he appreciates that his conduct is in fact a breach of the undertaking or the order."
By reference to a case dealing with proceedings for alleged infringement of copyright an example is given where, by an undertaking or interlocutory order, a defendant is required to refrain from infringing the plaintiff's copyright, that this means the copyright which the plaintiff claims to have and requires the substance and ownership of the copyright to be assumed, it not being open to the defendant to argue questions relating to the subsistence of ownership and copyright in the committal proceedings. It is also said that where an undertaking is unqualified in its terms and it is proved that the party giving the undertaking has not complied with it, it is no answer to a contempt charge to prove that the non‑compliance was casual, inadvertent or accidental rather than deliberate because such features go only to the question of what, if any, penalty should be imposed.
However, in the present circumstances I am by no means satisfied that this particular undertaking in the circumstances in which it was sought and given is clear or unambiguous. Having regard to the matters which I have mentioned I consider that, at least on the application of the standard of proof which needs to be applied in applications for contempt, I should treat this undertaking as meaning, in the circumstances in which it was given, that there would be no quarrying of riverstone in respect of the property for which the interlocutory injunction was being brought.
I realise that that is a construction fiercely contested by the plaintiff, but it is also one which appears to have occurred to the solicitors later acting for the defendant in the course of inconclusive correspondence which proposed a variation of the undertaking. That being the case, even if it had been established to my satisfaction that the conduct complained of had occurred and had resulted in the quarrying and sale of riverstone or other products that are alleged to come from Nelson location 13019, that conduct would therefore fall outside the limits of the conduct restrained by the undertaking.
There is no basis on this construction for any coercive sanction against the defendant. That would be sufficient to dispose of the application, however, it is desirable that I should say a little more about the facts of the case. The evidence which is before the court demonstrates that there is indeed a second pit. It is located on Nelson location 13019 and it has been there for quite some time.
It is alleged in the statement of claim that there have been extractive activities conducted in the second pit by the defendant in breach of the licence agreement since before the statement of claim was delivered. Indeed, looking at the photographs and seeing the video today it is clear that the extractive operations at that pit have been established for quite a lengthy time, having regard to the size of the pit and the size of the soil which is nearby.

We are not concerned today with whether or not there have been materials removed from that pit at any time other than in January and February this year. The evidence does show that there were some activities apparently taking place in January or February, but on a relatively small scale. Mr Seeber swears that the rocks which were being taken in January and February were not of commercial value, that they were rejects from the grizzly; and that they were being used by him for drainage and other earthworks about his own farm.
I would not regard use of rocks from the pit for those limited purposes as being in breach of the undertaking. The undertaking, in the context in which it is given, is plainly directed to the prevention of commercial exploitation by sale and distribution of rocks into the suburban and municipal markets for resale. In that regard it is asserted that there was the sale of some rocks from this pit by Mr Seeber to one of the plaintiff's witnesses. It is clear that there was the delivery of some rocks to that witness.
Mr Seeber on the other hand says that the rocks which were delivered to that witness, although coming originally from his property, had been delivered to another customer, (it turns out his sister), some considerable time before, had been stored there in the expectation that they would be used on his sister's property, but for reasons which we need not go into, became surplus to requirements. He says that he collected them and distributed them to the customer and that that was the source of the rocks.
I am invited to disbelieve Mr Seeber in his explanation in that regard and also to disbelieve Mrs Wallis, his sister, in that regard essentially perhaps because it is submitted that the explanation appears to be unduly convenient, is supported only by witnesses who are related and who are perhaps sympathetic to one another and because it is said to be somewhat unconvincing. In that regard I should mention that there was no direct suggestion made to Mrs Wallis in cross‑examination that her testimony was false and it was not established, at least to my satisfaction, that Mr Seeber was giving false evidence in this regard.
The onus of proof in circumstances like this is a high onus. It rests upon the plaintiff and I am not satisfied that it has been discharged. So despite there being some grounds for suspicion and hesitation about the evidence which has been given I am not satisfied that there has been any conduct committed by Mr Seeber which, if contrary to my earlier conclusion, this undertaking extended to the land which is the subject of Nelson location 13019, would have resulted in a breach of the undertaking. For these reasons I propose to dismiss the motion for contempt.