Walker v Preston - [2010] WASC 32

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: WALKER -v- PRESTON [2010] WASC 32

CORAM: BEECH J

HEARD: 10 FEBRUARY 2010

DELIVERED : 23 FEBRUARY 2010

FILE NO/S: CIV 2332 of 2006

BETWEEN: PATRICK JOHN WALKER AS COMMISSIONER FOR CONSUMER PROTECTION
Plaintiff
AND
STEVE PRESTON
Defendant

Catchwords:

Courts and judges - Contempt of court - Alleged breach of order for injunction - Whether injunction breached as alleged - Turns on own facts

Legislation:

Nil

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff: Ms L B Black
Defendant: No appearance

Solicitors:

Plaintiff: Department of Consumer & Employment Protection
Defendant: No appearance

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

Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 161 CLR 98
Hope v Bathurst City Council [1980] HCA 16; (1981) 144 CLR 1
International Land Developments Pty Ltd v Diamo Nominees Pty Ltd [2007] WASC 96; (2007) 34 WAR 201
Pioneer Concrete Services Pty Ltd v Gallo [1985] VR 675
R v Pearce (1992) 7 WAR 395
Witham v Holloway [1995] HCA 3; (1995) 183 CLR 525

BEECH J:

Introduction

The plaintiff (the Commissioner) applies for an order that the defendant be committed for contempt in respect of his conduct in breaching orders for injunctions made by consent by Registrar Powell on 30 May 2007. For the reasons that follow, I would dismiss the application. In summary, I am not satisfied beyond reasonable doubt that the defendant breached the paragraph of the orders alleged by the Commissioner to have been breached.

The orders for injunctions

On 12 December 2006 the Commissioner commenced this action. The writ claimed injunctions pursuant to the Supreme Court Act 1935 (WA) and/or s 74 and s 76 of the Fair Trading Act 1987 (WA) restraining the defendant from engaging in conduct in contravention of the Fair Trading Act. On the same date the Commissioner filed a chamber summons for an interlocutory injunction. An interlocutory injunction was granted by Templeman J on 7 February 2007. The terms of that interlocutory injunction were substantially the same as the terms of the injunction made by Registrar Powell on 30 May 2007.
On 30 May 2007 Registrar Powell made orders in terms of the filed memorandum of consent orders dated 24 May 2007. The terms of the orders (the Orders) were as follows:
1.Until and unless the defendant is registered as a builder under s 10 of the Builders' Registration Act 1939, he be permanently restrained from:
1.1representing to any person that he:
1.1.1is registered as a builder with the Builders Registration Board;
or
1.1.2has legal authority to carry on business as a builder for works valued at over $12,000; or
1.1.3has legal authority to co-ordinate and/or supervise residential building works the licence in respect of which has been obtained by the owner of the land on which said works are, or are to be, carried out under an 'owner-builder licence'.
1.2representing to any person or entity that any other person:
1.2.1is registered as a builder with the Builders Registration Board;
or
1.2.2has legal authority to carry on business as a builder for works valued at over $12,000; or
1.2.3has legal authority to co‑ordinate and/or supervise residential building works the licence in respect of which has been obtained by the owner of the land on which said works are, or are to be, carried out under and 'owner-builder licence',
in circumstances where that is not the case.
1.3entering into any contract, whether orally or in writing, in his personal capacity or as agent for any other person or entity which relates to undertaking, co‑ordinating or supervising any building work valued at more than $12,000.00 in circumstances where the relevant person or entity is not a registered builder.
2.The action be dismissed.
3.There be no order as to the costs of the action.
The Commissioner makes the following submissions about the proper construction of the Orders:
(1)'represent' means convey expressly or impliedly by words or conduct;
(2)in determining whether the defendant made a representation, the conduct of the defendant is to be assessed objectively - not subjectively by reference to the understanding induced in Mr Woods;
(3)par 1.1.2 of the Orders applies whenever the defendant's words or conduct would create in the mind of a reasonable recipient a belief that the defendant is legally able to carry on business as a builder for works valued at over $12,000. It is not necessary that the Builders Registration Act be mentioned. Nor is it necessary that the source of the legal authority be specified.
I accept those submissions.

The Commissioner's case as particularised

In the chamber summons dated 28 August 2009, the Commissioner sets out particulars of the alleged contempt. The particulars are in the following terms.
A.On 30 May 2007, Registrar Powell made inter alia the following order pursuant to Order 43 Rule 16 of the Rules of the Supreme Court 1971:
1.Until and unless the defendant is registered as a builder under s 10 of the Builders' Registration Act 1939, he be permanently restrained from:
1.1representing to any person that he…
1.1.2has legal authority to carry on business as a builder for works valued at over $12,000…
B.In or about May 2007, Dennis Leslie Woods and Nicola Phillis Woods ('Owners') purchased a block of land in Orange Valley Road, Kalamunda. The Owners planned to build a house on this land.
C.In or about July 2007, the Defendant was introduced to the Owners. The Defendant went by the name Steve Brown.
D.In or about July and August 2007, the Defendant met with the Owners on at least five occasions. During these meetings, the Defendant:
•represented that he was in the process of setting up a company called Concrete Kit Homes which was going to build homes using new technology;
•showed the Owners some drawings and plans and provided a brochure for 'Concrete Kit Homes' showing prices and styles of homes;
•sent written correspondence to the Owners with a letterhead for 'Concrete Kit Homes';
•produced samples of the material out of which the walls of the house would be constructed;
•represented that he could supply and erect a kit home without a registered builder but that kitchen and bathroom fit-outs would have to be organised by the Owners; and
•represented to the Owners that he was attempting to get a registered builder involved in the 'Concrete Kit Homes' business in order to be able to provide a full building service.
E.On or about 29 August 2007, the Owners paid the Defendant $10,920 as administration costs associated with taking the building to concrete pad completion.
F.In or about September 2007, the Defendant met with the Owners on several occasions during which the services included and the price for those services were negotiated.
G.On or about 10 October 2007, the Defendant presented to the Owners a document purporting to be a building contract. The Owners signed the document on that day. The document was not signed by the Defendant on that day.
H.On a date unknown between 10 October 2007 and 15 October 2007, Peter Bonney signed the document purporting to be a building contract.
I.On or about 15 October 2007, the Owners paid the Defendant $70,000.
J.In or about March 2008, the Owners and the Defendant re‑negotiated the terms of the agreement by which it was agreed that the Defendant would perform all of the works that were previously excluded [from] the agreement.
The Commissioner alleges contempt by breach of par 1.1.2 of the Orders. The Commissioner is bound by his particulars: see, for example, R v Pearce (1992) 7 WAR 395; Kendall & Curthoys, Civil Procedure In WA [55.5.1]. Consequently, whether the conduct of the defendant might involve a breach of other paragraphs of the Orders does not arise for determination in this application.

Principles

An allegation of contempt is criminal in nature. All elements must be proved beyond reasonable doubt: Witham v Holloway [1995] HCA 3; (1995) 183 CLR 525.
The Commissioner's primary case is that the defendant is guilty of criminal contempt. Deliberate or contumacious defiance of a court order constitutes criminal contempt: Witham v Holloway (530); Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 161 CLR 98, 108.
If a breach of an order is a result of 'casual or accidental or unintentional disobedience' then there is no power to impose a fine: Witham v Holloway (541); Australasian Meat Industry Employees Union v Mudginberri (109 ‑ 115).
On the need to prove knowledge of the facts that make the act or omission a breach of the order, see International Land Developments Pty Ltd v Diamo Nominees Pty Ltd [2007] WASC 96; (2007) 34 WAR 201 [43] ‑ [68].
The Commissioner accepts that to make out his case of criminal contempt he must establish beyond reasonable doubt that the defendant's breach of the order was wilful.

The evidence

The Commissioner relies primarily on an affidavit of Mr Dennis Woods, one of the owners referred to in the particulars set out earlier in these reasons. Mr Woods' affidavit establishes the allegations in pars D to J of the particulars.
I will say more about some of the evidence, with my observations on aspects of it, in the next section of these reasons.

Is the alleged contempt established?

The first and crucial issue is: Does the conduct of the defendant as particularised amount to a representation that he has legal authority to carry on business as a builder for works valued at over $12,000?
If the Commissioner succeeds on the first issue, to establish a criminal contempt he must also establish that the breach was wilful.
In my opinion, the Commissioner fails on the first issue. For the reasons that follow, I am not satisfied beyond reasonable doubt that the defendant represented that he had legal authority to carry on business as a builder for works valued at over $12,000.
In my opinion, the natural and ordinary meaning of 'he' in par 1.1 is limited to the defendant personally and does not extend to a company or other legal entity which he is interested in or controls.
The ordinary meaning of 'carrying on a business' is to conduct a commercial enterprise as a going concern: Hope v Bathurst City Council [1980] HCA 16; (1981) 144 CLR 1, 8; Pioneer Concrete Services Pty Ltd v Gallo [1985] VR 675, 707 ‑ 709.
If a company carries on a business, and derives profit, a director who acts in that capacity is not himself carrying on that business. Nor is a shareholder of the company who may share in the profit made by the company. The legal entity deriving the profit is the person who is carrying on the business.
If customers deal with a person (A) as an officer or employee of a company, on the basis that:
(a)the company will provide the services;
(b)the contract will not be in A's name; and
(c)payment is to be made to the company, not to A;
then, in my opinion, the business of providing those services is carried on by the company, not by A.
It seems to me that, in substance, that is the effect of the words and conduct of the defendant or, at the least, that is not excluded beyond reasonable doubt.
The following seems to me to arise from the evidence, or at least is not excluded beyond reasonable doubt. The substance of what the defendant conveyed, by his words and conduct, was that while he would be doing some of the work, the services were to be provided and the business was to be conducted by the company that he was in the process of setting up. In the earlier stages he referred to that company by the name Concrete Kit Homes. At the meeting in September 2007 he said that Concrete Kit Homes was the trading name for a family company that he was setting up by the name of The Aaron Group Pty Ltd.
Counsel for the Commissioner refers to a number of aspects of the evidence. I turn to the evidence of Mr Woods in more detail to explain further the conclusion to which I have come.
Mr Woods said at [7] of his affidavit that at the initial meeting in July 2007 the defendant told them that 'he was in the process of setting up a company called Concrete Kit Homes which was going to build homes using new technology'. Thus, the defendant's initial statements were to the effect that the company called Concrete Kit Homes, not the defendant himself, was going to build homes.
The defendant provided a brochure with the name Concrete Kit Homes on it (annexure DLW1).
On 17 July 2007 Mr and Mrs Woods received a letter (annexure DLW2) on Concrete Kit Homes letterhead that was signed 'Steve'. The letter stated that all legal documents specific to Concrete Kit Homes were now being drawn up by its lawyers. The letter further stated that after discussions with a new silent partner, the defendant's new position 'within the company' would be technical officer/sales division.
Thus this letter further conveyed the impression that any contract would be with, and any business was being conducted by, a company under the name Concrete Kit Homes.
At a further meeting in August 2007 the defendant said that Concrete Kit Homes would manufacture, supply and erect the kit home and that it was Mr and Mrs Woods' responsibility to prepare the block and arrange for the kitchen and bathroom fit-outs [20] ‑ [21].
Mr and Mrs Woods received a letter dated 13 August 2007 (annexure DLW3), signed by the defendant in the name 'Steve', that stated that 'we have been advised that we cannot offer any other service other than manufacture/supply/installation of kit homes'. In the context of what had gone before, I take the reference to 'we' as a reference to Concrete Kit Homes.
At a subsequent meeting in August 2007 the defendant said that he had a registered builder who was interested in being involved in the business and that the reason the defendant wanted a registered builder involved was that he needed a registered builder to be able to do the full fit-out of a house. Without a registered builder he said 'he' could only supply and erect the kit home [24]. Counsel for the Commissioner emphasised the language in [24], pointing out that the defendant said that 'he' could supply and erect the kit home without a registered builder. In the context of the previous discussions and correspondence as I have outlined it, I take the reference to 'he' as a reference to his business, namely Concrete Kit Homes. Certainly, I am not persuaded to the contrary beyond reasonable doubt.
Counsel for the Commissioner emphasises another aspect of [24]. She submits that, in substance, the defendant represented that he could do some of the work, including erecting a kit home, notwithstanding that he stated that he needed a registered builder in order to provide the full service. A business of supplying and erecting kit homes may well involve carrying on business as a builder. However, for the reasons I have given, in my opinion, the substance of the representation was that any business was being carried on by Concrete Kit Homes, not by the defendant.
That impression was subsequently reinforced by what the defendant said in September 2007, about the involvement of another person, said to be a registered builder, in 'the business'.
In his letter of 26 August 2007 (annexure DLW4) the defendant referred to preliminary discussions with 'the builder' who was said to be willing to be involved in the project. The letter referred to a sum of $8,000 for supervision of the builder as required. The letter was in the name of Aaron Group Pty Ltd [26].
At a meeting in September 2007 the defendant told Mr and Mrs Woods that 'the builder was now part of the business' and that this would enable him to provide the full building service. At the same meeting Mr Woods asked who The Aaron Group Pty Ltd was. The defendant said in response that it was a family company of his and that Concrete Kit Homes was the trading name for that company. The defendant said that the building work would 'actually be done by The Aaron Group Pty Ltd' and that he was still in the process of setting up that company [33].
Again, the substance of what was being conveyed, and in fact explicitly stated, by the defendant to Mr and Mrs Woods was that the building services would be provided by a company, now to be known as The Aaron Group Pty Ltd. The defendant did not convey that he would provide the building services in his personal capacity or on his own behalf, or that he would be conducting any building business.
At a meeting in early October 2007 the defendant provided a contract to Mr and Mrs Woods [36] ‑ [38]. They signed the contract. The builder was stated to be 'Peter Bonney'. The defendant told Mr Woods that Peter Bonney was the builder that the defendant had referred to previously [43]. The contract was not signed by any other person that day.
On or about 15 October 2007 the defendant gave Mr Woods a copy of the contract signed by Peter Bonney as builder. He also provided a schedule of works under the heading 'The Aaron Group'. Mr Woods paid a bank cheque for $70,000 made out to Concrete Kit Homes [41] ‑ [43].
There is evidence that, on some occasions after this, Mr Woods saw the defendant doing work on Mr and Mrs Woods' property [49], [56] and [68].
In April 2008 a variation of the contract was proposed by the defendant and accepted by Mr and Mrs Woods (annexure DLW7). The variation was on Concrete Kit Homes' letterhead and was signed in the name of P Bonney as builder.
No contract was ever entered in the defendant's name. Nothing the defendant said suggested that a contract would be entered in his name. The defendant did not request that cheques by paid in his name. Cheques were not paid in his name, but in the name of Concrete Kit Homes.
Counsel for the Commissioner submits (ts 7, 13, 22, 23, 26) that the substance of what the defendant represented was that he would do the building work or a part of that work. In my opinion, assuming that that is so, to say that he would be the person performing the work is not to say that he would be carrying on a business. Insofar as he represented that he would do the work, he represented that he would do the work as part of the company's business, not as part of his own business. Consequently, any express or implied representation that that business was being conducted with lawful authority related to the business of the company, not to his own business.
The same point arises in relation to the fact, also emphasised in the Commissioner's submissions, that the defendant was seen by Mr and Mrs Woods physically doing the work.
Counsel for the Commissioner emphasises in her submissions that the defendant was the only person that Mr and Mrs Woods ever dealt with. To my mind, that is not of significant weight in the proper characterisation of the substance of what was represented by the defendant. As I have said, the allegation of contempt in breach of par 1.1.2 of the Orders directs attention to what the defendant represented regarding him personally carrying on business as a builder.
Counsel for the Commissioner submits that what the defendant conveyed, by his words and conduct, regarding the corporate or other vehicles through which the work was to be done was not important. She submits that 'the precise legal structures were irrelevant. As far as the Woods were concerned, [the defendant] was going to build them a home' (ts 19). I do not accept that submission. The representation said to have been made by the defendant, constituting the alleged contempt, relates to the carrying on of business as a builder, not to the doing of work as a builder. The corporate or other vehicle through which the work is said to be done is, in my opinion, of central significance to who is represented to be carrying on any relevant business.

Similarly, the Commissioner submits (ts 9) that, in substance, the defendant represented that he personally would build and was able to build the home and the company was 'merely a vehicle through which he could carry out the work.' I do not accept that submission. An allegation of breach of par 1.1.2 directs attention to any representation about the carrying on of a business as builder, not the carrying out of building work.
The Commissioner further submits (ts 14) that it could be inferred that the work to be done by the defendant was done as part of a business, because the parties were unrelated and because Mr and Mrs Woods were to pay for the work. I accept that. However, the question is not whether the work was to be done as part of a business. Rather, the question is who (according to what the defendant represented) is carrying on the business for which the work is to be done.
Counsel for the Commissioner points to the inconsistencies in what was said by the defendant about the role of various business names and corporate entities. I accept that there were inconsistencies but, to my mind, they do not alter the essential character of what the defendant was saying. The defendant was dealing with Mr and Mrs Woods on behalf of a company, not on his own behalf. Based on what he said, it was the company's business, not his.

Conclusion

For these reasons I would dismiss the Commissioner's application.