Woolly & Woolly
[2023] FedCFamC1F 634
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Woolly & Woolly [2023] FedCFamC1F 634
File number(s): MLC 12173 of 2018 Judgment of: CARTER J Date of judgment: 1 August 2023 Catchwords: FAMILY LAW – CONTRAVENTION – where the respondent breached interim orders for the preservation of the asset pool pending final determination – where the respondent’s contraventions of the injunctive relief diminished the pool and could defeat the applicant’s substantive claim for relief – where the respondent pleaded guilty to two breaches after the close of evidence – whether a term of imprisonment is an appropriate sanction – where the respondent’s behaviour was a serious challenge to the authority of the court – where the respondent provided no reasonable explanation or exculpatory factors for the contraventions – sentencing principles
FAMILY LAW – COSTS – where the applicant seeks indemnity costs – where the circumstances for an indemnity costs order are not established – where costs on a party/party basis are not sufficient – where the quantum of costs is fixed pursuant to rule 12.17 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Legislation: Evidence Act1995 (Cth) s 140
Family Law Act 1975 (Cth) ss 79, 112AA, 112AB, 112AC, 112AD, 112AE, 112AG, 112AP, 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 12.17
Cases cited: Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd 161 CLR 98
Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225
Forlan & Forlan (No 2) [2017] FamCA 936
Gaines and Gaines [2011] FMCAfam 485
Giddens & Giddens [2016] FCCA 3201
Kohan and Kohan (1993) FLC 92-340
Laffy & George [2012] FMCAfam 775
Langer & Griffin (2013) FLC 93-559
Prantage & Prantage (2013) FLC 93-544
Tate & Tate (No 3) (2003) FLC 93-138
Division: Division 1 First Instance Number of paragraphs: 101 Date of last submission/s: 13 June 2023 Date of hearing: 13, 20, 31 January and 13 June 2023 Place: Melbourne Counsel for the Applicant: James Eley Solicitor for the Applicant: Sayer Jones Family Lawyers Respondent: Litigant in person ORDERS
MLC 12173 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS WOOLLY
Applicant
AND: MR WOOLLY
Respondent
order made by:
CARTER J
DATE OF ORDER:
1 august 2023
THE COURT FINDS THAT:
1.The respondent, MR WOOLLY is found guilty, without reasonable excuse of contravening:
(a)Order 6 of the orders made on 26 October 2021 and
(b)Order 1 of the orders made on 3 May 2022.
THE COURT ORDERS THAT:
2.In the event the sum of $200,000 has not been paid by or on behalf of the respondent MR WOOLLY, to the applicant’s solicitors on or before 22 August 2023, then pursuant to s 112AD(2)(d) of the Family Law Act 1975 (Cth), the respondent is sentenced to a term of imprisonment for three months (90 days), commencing from the date of arrest and ceasing:
(a)three months (being 90 days) after the respondent has been taken into custody;
(b)upon the respondent paying or causing the payment of the sum of $200,000 into the applicant’s solicitors’ trust account; or
(c)until further order
whichever is the earlier.
3.The respondent pay the applicant’s costs fixed at $20,000, with payment of same to be made at settlement of the substantive property proceedings currently before the Federal Circuit and Family Court of Australia (Division 2).
AND THE COURT NOTES THAT:
A.In the event the chambers of Justice Carter are not notified that the sum of $200,000 has been paid on or before 22 August 2023, the warrant of arrest will be issued in Chambers.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUSTICE CARTER
In 2021, the respondent received over $450,000 by way of settlement of his WorkCover claim.
On 29 September 2021, the applicant issued proceedings seeking orders including to restrain the respondent from dealing with those settlement monies.
On 26 October 2021 orders were made that provided the respondent was to preserve the sum of $200,000 in an account in his name and thereafter “shall not deal in any way with the sum of $200,000 out of the WorkCover settlement monies” except with the applicant’s agreement, or by Court order.
It is an agreed fact that as of 22 November 2021, the respondent removed funds from his account #...29 into which the WorkCover monies had been deposited, and paid funds to his partner. This caused the balance in his accounts to fall below $200,000. The total balance in the respondent’s accounts has not exceeded $200,000 since that time.
On 3 May 2022 orders were made that required the respondent to deposit $200,000 into the applicant’s solicitor’s trust account within 48 hours of the date of the orders. It is an agreed fact that these funds were never deposited in part or in whole.
It is the respondent’s evidence that he has now disposed of the entire funds.
The applicant filed a Contravention Application on 24 May 2022 of which she pursues two counts as follows:
·Count 1 – that the respondent failed to deposit the sum of $200,000 into the applicant’s solicitors’ trust account, being a breach of Order 1 of the orders made 3 May 2022; and
·Count 3 – that the respondent reduced the balance of his bank account holding the WorkCover settlement monies to below $200,000, being a breach of Order 6 of the orders made 26 October 2021.
The applicant also seeks her costs on an indemnity basis, which she says amount to $55,221.59.
I note the orders that have been contravened were made by the Federal Circuit and Family Court of Australia (Division 2). The substantive property proceedings remain in that Court. The contravention was transferred to the Federal Circuit and Family Court of Australia (Division 1) on 9 September 2022, with the transfer being made on the basis of “availability of judicial resources”. I remain unclear as to why the matter has been dealt with in this manner. However, I am satisfied that I can hear and determine the application even though the asserted contraventions are contraventions of orders made by another Court. To that end I note that s 112AD(1) of the Family Law Act 1975 (Cth) provides that “a court having jurisdiction under this Act” may make an order imposing a sanction if “an order under this Act” has been contravened without reasonable excuse.
The hearing was delayed on several occasions as a result of the respondent’s non-attendance at Court and claims of ill health.
Ultimately, the hearing commenced on 13 January 2023. It was adjourned part heard to 20 January 2023. There was some suggestion the parties may have been able to negotiate a resolution and the matter was adjourned to 31 January 2023. At that time the parties requested a further adjournment to continue negotiations. Those negotiations broke down, and the matter was relisted – and concluded – on 13 June 2023.
THE EVIDENCE
The applicant relied on:
(a)Initiating Application filed by the applicant on 28 September 2021;
(b)affidavit of the applicant filed 28 September 2021;
(c)Financial Statement of the applicant filed 28 September 2021;
(d)affidavit of the respondent filed 28 September 2021;
(e)Financial Statement of the respondent filed 22 November 2021;
(f)Contravention Application filed by the applicant on 24 May 2022;
(g)affidavit of the applicant filed 24 May 2022;
(h)affidavit of Ms Nicola Kahler filed 5 September 2022;
(i)affidavit of Ms Nicola Kahler filed 18 November 2022; and
(j)affidavit of Mr William Henry Jones filed 23 November 2022.
The respondent relied on his Financial Statement that was tendered in evidence on 13 January 2023. The respondent did not wish to cross examine the applicant or her witnesses.
HAS THE RESPONDENT CONTRAVENED THE ORDERS?
The legal principles
The application is brought under Part XIIIA of the Act. There is no controversy that the orders which the applicant asserts were breached are orders under this Act within the meaning of s 112AA.
Section 112AB of the Act provides that a person will only be taken to have contravened an order if the person bound by the order intentionally failed to comply with the order or made no reasonable attempt to comply with it.
Section 112AC provides that a person may have a reasonable excuse for contravening an order if they did not understand the obligations the order imposed and the Court is satisfied they ought be excused in respect of the contravention. A person may be able to satisfy the Court as to other matters or circumstances that amount to a reasonable excuse.
The formal application before the Court is a Contravention Application. The requisite standard of proof is the balance of probabilities, as set out in s 140(1) of the Evidence Act1995 (Cth). As is provided in s 140(2), in determining whether I am satisfied on the balance of probabilities, I may take into account the nature of the cause of action or defence, the nature of the subject matter and the gravity of the matters alleged.
I note the applicant urged the Court to find that the respondent’s conduct was a flagrant challenge to the authority of the Court, and should be regarded as a contempt of Court within the meaning of s 112AP(1)(b) of the Act. In relation to contempt proceeding, the requisite standard is beyond a reasonable doubt.
The respondent’s plea
The respondent initially asserted he had a reasonable excuse in relation to the two counts. He said he did not understand the obligations of either order imposed on him. He said there was a lot going on for him at the time and he “thought it was going to be heard at trial”. He was referring to the final hearing in relation to the application brought by the wife pursuant to s 79 of the Act. The respondent also said at the time of the breaches he was struggling financially, was suicidal, had no funds and was not managing. He said the WorkCover settlement monies should be regarded as his as it was ‘his accident’. He also said that if she “wins the case” (which I understood to mean if orders were made pursuant to s 79 that the respondent pay the applicant monies) he would pay the money at that time.
However, the respondent abandoned the reasonable excuse argument at the commencement of the second day of the hearing. He admitted he contravened the two orders as asserted, that he understood the obligations imposed on him by those orders and that he had no reasonable excuse for contravening those orders. He was given a further opportunity to speak with a Duty Lawyer when he indicated he now admitted to contravening the orders. He declined that opportunity – as he had also done the previous day. His plea was then formally amended.
Even if the respondent had not amended his plea, taking into account the nature of the matter before me, and the seriousness of the matters alleged, I would have been satisfied on the balance of probabilities – and indeed, beyond reasonable doubt that:
(a)the two contraventions had been established within the meaning of s 112AB of the Act; and
(b)the respondent’s evidence could not have led to a finding that he had a reasonable excuse pursuant to s 112AC.
The facts are as follows:
(a)The funds of over $450,000 were received by the respondent as his net settlement of a WorkCover claim and paid into his Commonwealth Bank Account ending #...29 in 2021. From that time the respondent regularly withdrew funds from that account into another account in his name ending #...78, from which he then transferred the funds to third parties, spent the funds or withdrew the funds as cash. The respondent did not identify any other account in his name into which the WorkCover monies had been paid.
(b)On 29 September 2021 the applicant filed an Initiating Application seeking a property settlement to include that she be paid $200,000 from the respondent’s WorkCover monies. By that time the respondent had reduced the funds in account #...29 to approximately $410,000.
(c)On 26 October 2021 the matter was listed before Chief Judge Alstergren, and orders were made that the respondent pay $50,000 as a child support payment. On that day the respondent confirmed to the Court that he still had the majority of the funds received from his WorkCover claim. He gave an oral undertaking that he would preserve the sum of $200,000 of the WorkCover monies in an interest bearing account in his name until further order. The orders provided that the respondent otherwise was not to deal in any way with the sum of $200,000 from his WorkCover claim without agreement of the applicant or a Court order. Care was taken by his Honour to ensure that the respondent understood his obligations to preserve the funds and the respondent confirmed to the Court that day that he understood those obligations.
(d)Those orders also required the respondent to provide to the applicant by 3 November 2021, an affidavit setting out the bank account details of the account in which he would preserve the sum of $200,000 from the WorkCover monies.
(e)The respondent did not file an affidavit on or before 3 November 2021.
(f)The respondent did immediately comply with the order to pay $50,000 into the applicant’s solicitor’s trust account being the child support payment. After transferring the funds for child support, account #...29 had the amount of approximately $328,800.
(g)Between October 2021 and February 2022 the respondent continued to make multiple transfers from his account #...29 into his account #...78, and then out of that second account funds were transferred to third parties, or taken out as cash withdrawals or purchases. None of those transfers was to give effect to the orders of 26 October 2021 directed at the preservation of $200,000 of the WorkCover monies.
(h)On 22 November 2021 the respondent transferred the sum of $99,000 out of his account #...29, reducing the funds in that account to below $200,000. At that time the balance in the account was $187,218.75. He transferred the monies to his account #...78, and then transferred the same amount into an account in the name of his partner, with the description “Wedding”. The balance in account #...78 was then $1,867.42.
(i)On that same day, the respondent filed a Financial Statement in which he deposed he had $300,000 in savings.
(j)Neither of the respondent’s accounts have had a balance singly, or taken together, in excess of $200,000 at any time after 22 November 2021. He was, and has remained, in breach since that time.
(k)On 17 December 2021 the applicant’s solicitors wrote to the respondent and requested that he pay the sum of $200,000 into their trust account.
(l)On 15 February 2022 the applicant subpoenaed the Commonwealth Bank of Australia seeking the production of all the respondent’s bank statements. The respondent objected to that subpoena, asserting that only the statements for the period July to October 2021 could be relevant.
(m)The subpoenaed bank statements reveal that as at 15 February 2022 just $25,030 remained in account #...29 and account #...78 had a balance of $455.59. Accordingly, (and leaving aside the funds paid by way of child support) the respondent had disposed of around $416,000 in the six months from August 2021 to February 2022. Overall, that equates to a spending of almost $16,000 per week, or around $2,285 a day.
(n)On 21 February 2022 the applicant filed an Application in a Proceeding seeking that the respondent deposit $200,000 into her solicitors’ trust account.
(o)The respondent paid the sum of $321 into the applicant’s solicitors’ trust account on 23 February 2022, in settlement of the costs order made against him on 26 October 2021.
(p)On 3 May 2022, orders were made by Harland J for the respondent to pay the sum of $200,000 into the applicant’s solicitors’ trust account within 48 hours. Her Honour delivered reasons that day. In the course of those reasons, her Honour referred to the serious obligations imposed on the respondent as a result of the orders made 26 October 2021, and the distinction between compliance with interim orders to preserve the pool and the final determination of whether there should be any further property adjustment between the parties.
(q)On that day, the respondent’s subpoena objection was dismissed.
(r)On 5, 9 and 13 May 2022 the applicant’s solicitors wrote to the respondent advising of how the funds could be paid into their trust account.
(s)The respondent has not paid $200,000, or indeed any sum, into the applicant’s solicitors’ trust account to discharge or even partially discharge his obligations under Order 6 of the orders made 3 May 2022.
Under cross examination the respondent admitted:
(a)he did understand the obligations that both orders imposed on him;
(b)he did not preserve the funds as required pursuant to the orders of 26 October 2021;
(c)there was no practical impediment that prevented him from complying with that order;
(d)he did not comply with Order 6 of the orders of 26 October 2021 that he not deal in any way with the sum of $200,000;
(e)that as of 22 November 2021 the balances in his accounts had fallen below $200,000;
(f)he had spent or disbursed the whole of the WorkCover monies, asserting that he needed the funds himself “to pretty much start a life again”; and
(g)he did not pay and has not paid any amount to the applicant’s lawyer in accordance with Order 1 of the orders of 3 May 2022. Any funds he still had in his accounts at that time continued to be spent by him, and have now been completely disbursed.
The respondent’s evidence as to how he spent the entire WorkCover monies following the orders made on 26 October 2021 was evasive, inconsistent and unbelievable:
(a)After he received the WorkCover payment, the respondent made almost daily transfers of funds from #...29 into account #...78. He then spent the funds making purchases, as well as making multiple cash withdrawals from that account, at hotels or at ATMs. He was unable to explain or recall how those cash funds were spent. This pattern of transfers, withdrawals and spending continued after the orders were made on 26 October 2022.
(b)In relation to the transfer of $99,000 on 22 November 2021, the applicant’s evidence was he had paid that to his partner. He said whilst he had entered the descriptor “Wedding”, it was actually for living expenses. However, he was unable to provide detailed or convincing evidence as to how those funds had been applied, other than towards some rent.
(c)The respondent would not admit he had used the funds for holidays – although he had to concede there were Airbnb transactions and other expenditure out of account #...78 consistent with holidays. Some transfers were given descriptors such as “holiday with my girl xxx”. There were a number of transactions in Town B in the summer 2021/2022. When these matters were pointed out to him he insisted he had not sought to mislead the Court when he said he did not use the funds for a holiday, as his interpretation of a holiday was overseas travel, not just a “little get away”.
(d)The sum of $40,000 was transferred out of account #...29 in January 2022 with the descriptor “Car”. The respondent’s evidence about this was difficult to follow, although he conceded at some point that he spent some funds on a vehicle. In his Financial Statement he adopted in his evidence he owned a vehicle worth $39,000, but that he also owed $20,000 on a car loan. As best as I understood his evidence, he said that was a loan on a different vehicle.
(e)The respondent said he bought new furniture and a fridge, but provided no other details and did not identify bank transactions in that regard. In his Financial Statement he records his household contents as having NIL value;
(f)The respondent said he spent another $10,000 in equipment in around mid-2022 to start a business. This expenditure occurred after the orders were made by Harland J requiring him to pay the sum of $200,000 into the applicant’s solicitors trust account notwithstanding that her Honour made it abundantly clear to the respondent that compliance with Court orders was not optional, and that the orders that were made on 26 October 2021 were serious orders. The respondent said he could not recall many details of the purchases of equipment, save that he spent around $1,200 on a piece of equipment, and “customised” the one that he already had.
(g)None of those items were included on his Financial Statement adopted by him and tendered in evidence on 13 January 2023.
As already observed, as at 22 November 2021 the respondent allowed the funds in his accounts to fall below the $200,000 he was required to preserve. After that date, the respondent continued the same pattern of almost daily transfers from #...29 into account #...78 and then disposing of the funds:
(a)making cash withdrawals at hotels or ATMS;
(b)making purchases at various stores including an adult store on multiple occasions, as well as JB Hi Fi, Coles, Myer, Bunnings, Woolworths and Dan Murphy’s. He purchased swimwear and books, spent funds at outdoor living and gardening shops, purchased vehicle accessories, and Ubereats; and
(c)making transfers into his partner’s account.
At no time did he seek the applicant’s agreement that he use any of the monies.
As already observed, there was nothing in the respondent’s evidence or submissions that could begin to amount to a reasonable excuse for his failure to comply with either the orders of 26 October 2021 or the orders of 3 May 2022. He understood his obligations. He made no attempt to comply with the orders, and indeed, his contravention of the orders was deliberate and intentional. He did not regard the applicant as entitled to any part of the monies, which he regarded as ‘his’ to spend.
SANCTIONS FOR FAILURE TO COMPLY WITH ORDERS
Section 112AD(1) empowers the Court to impose such sanction or sanctions contained in s 112AD(2) as the Court considers to be the most appropriate in the circumstances.
Section 112AD(2) provides that the available sanctions are:
(a)to require the respondent to enter a bond;
(b)to impose a sentence in accordance with s 112AG;
(c)to fine a person not more than 60 penalty units; or
(d)to impose a sentence of imprisonment.
The Court can also make such other orders as it considers necessary to ensure compliance with the order that was contravened [s 112AD(4)].
Pursuant to s 112AE(2) the Court shall not impose a prison sentence unless the Court is satisfied that in all the circumstances of the case it would not be appropriate for the Court to deal with the contravention by imposing any other sanction.
WHAT IS AN APPROPRIATE SANCTION?
It is the applicant’s case that:
(a)the respondent’s contraventions were deliberate; and
(b)there is no other sanction that can be appropriately imposed other than imprisonment.
The applicant sought the respondent be imprisoned for 12 months, or until he paid the sum of $200,000 into her solicitors trust account, whichever occurred first.
Coercive or punitive?
Ordinarily the purpose of contravention proceedings is to coerce a respondent to comply with orders. However, if there is no prospect of compliance it could not be the case that the respondent’s breaches should be without consequence.
In this case, the respondent says he has expended all the funds and has no way of securing the sum of $200,000 from other sources to be paid into the applicant’s solicitors trust account. If he is correct, compliance may not be achievable. However, significant funds were transferred to the respondent’s partner. Whilst she was not joined to these proceedings by the applicant, it may be that by imposing a serious penalty on the respondent he may find a way to comply with the orders.
If I am wrong about that, and there is no possibility of compliance, I am still of the view that it is appropriate to impose a sanction as a punishment. His breaches are serious and significant such that whilst the application before me is brought pursuant to s 112AD, it could have been brought pursuant to s 112AP. The respondent’s contravention of the orders could be characterised as a flagrant challenge to the authority of the Court.
In relation to contempt proceedings, it is clear that a sentence may be for the purpose of compliance by coercion, and/or to punish wilful disobedience of a Court’s order in order to ensure the Court’s processes are protected. As observed by the majority of the High Court of Australia in Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd 161 CLR 98 at [17]:-
Although the primary purpose in committing a defendant who disobeys an injunction is to enforce the injunction for the benefit of the plaintiff, another purpose is to protect the effective administration of justice by demonstrating that the court’s orders will be enforced.
Again in a case dealing with a contempt application – rather than a contravention – the Full Court observed in Tate & Tate (No 3) (2003) FLC 93-138 at [74] in circumstances where one party had deliberately defied a number of Court orders:
If parties were to behave in this fashion generally, the business of the Court would come to a standstill and many people would be deprived of their entitlements.
Whilst those cases are in relation to contempt applications, I am of the view that the comments and observations are applicable in these proceedings. The respondent has deliberately breached interim orders that sought to preserve the asset pool pending final determination. Those breaches may result in the applicant being deprived of her entitlements. Given the serious nature of the contraventions, and the need to protect the effective administration of justice and the Court’s authority, I am of the view that it is appropriate the penalty imposed be both coercive and punitive.
Are there alternate appropriate sanctions to imprisonment? Section 112AE(2)
It is plain that the imposition of a criminal sanction is a significant matter, which the Full Court has said needs to be approached with “considerable caution”: Langer & Griffin (2013) FLC 93-559 at [46]. Imprisonment is a sentence of last resort – I am not to impose a prison sentence unless I have determined it would not be appropriate for me to impose any other sanction: s 112AE(2).
To require respondent to enter into a bond
It seems to me that there is no merit in requiring the respondent to enter into a bond. A bond with a condition that a person be of good behaviour may be useful in circumstances where there may otherwise be a likelihood of re-offending, or if there are other ongoing orders that require the respondent’s compliance. Those considerations do not appear to apply in this matter.
I note also the respondent expressed little contrition. I am of the view that a bond would be an inadequate and ineffective sanction given the seriousness of the contraventions.
Imposition of a fine
I agree with the submissions made by counsel for the applicant that the Court could have little confidence that the respondent would comply with a pecuniary penalty. The respondent said he earns limited income, and has no significant assets.
The respondent acknowledged he owed Fines Victoria around $34,000 in late 2021. His evidence was he did not apply the WorkCover monies to discharge that debt. In his Financial Statement tendered on 13 January 2023 the respondent recorded his liability to Fines Victoria remained unchanged. That is, he has made no effort to discharge or reduce that liability. In his oral evidence, he said that he has made some modest payments on a payment plan, but that he has made no headway as he is incurring interest on the outstanding amount.
On 1 December 2022, I made an order that the respondent pay the applicant’s costs of $4,100, being her costs thrown away within 28 days. The respondent has not paid those costs despite previously telling the Court he could pay those costs within a couple of months.
A fine can be up to 60 penalty units. A penalty unit is currently $275. That would mean at the highest, the respondent could be fined $16,500 on each count. That is insufficient given the sum the respondent was to preserve was $200,000. At any rate, a fine would be paid to the Commonwealth and could not be of benefit to the applicant. If I required the respondent to pay a fine, it could also further deplete the asset pool.
In those circumstances, there appears no utility in fining the respondent.
Additional sentencing alternatives pursuant to s 112AG
Pursuant to s 112AG there may be additional sentencing options available. However, I was not addressed as to whether any of the alternatives to sentencing are available in Victoria. Accordingly I do not know if any arrangements have been made between the Commonwealth and Victoria to provide access to the types of corrections arrangements contemplated in this section.
Term of imprisonment
In relation to sentences of imprisonment for a contravention, the Act provides:
(a)this shall only be imposed if the Court is satisfied that in all the circumstances it would not be appropriate for the Court to deal with the contravention by the imposition of any other sanction [s112AE(2)];
(b)the maximum term for imprisonment is 12 months but can be expressed to end upon compliance with the order, if that occurs earlier [s112AE(1)];
(c)a sentence can be suspended upon such terms and conditions as determined by the Court [s112AE(4A)]; and
(d)a person can be released upon entering into a bond after serving a specified term of imprisonment [s112AE(5)].
This is unfortunately a matter in which it is appropriate to impose a prison sentence on the respondent. It is not appropriate to impose any of the other sanctions. The respondent knew the obligations the orders imposed on him and he deliberately contravened the orders. He did so because he regarded the funds as ‘his’. He did not regard the applicant as being entitled to any part of the WorkCover monies, and in those circumstances he was determined to expend the monies in their entirety despite knowing he was required to preserve $200,000. He continued to spend what proportion of the compensation monies he still had in his accounts after orders were made by Harland J. He demonstrated no real contrition.
The respondent has not put plausible evidence before the Court that there was any practical impediment to his compliance with the orders. He had complete control over the WorkCover monies. He was the only person who had access to the funds.
There was no reasonable explanation by him as to how the monies were spent. There was no effort on his behalf to advise the applicant or her solicitors he was spending the funds. He did not seek her agreement. He used the funds for his own purposes, transferring amounts to his partner, purchasing personal items, withdrawing cash, and spending funds on holidays.
The contraventions are serious, substantial and enduring. The respondent’s deliberate flouting of the Court orders was contumacious.
Whilst there was some suggestion by the respondent that he was endeavouring to borrow funds to make the payment, or part of the payment to the applicant’s solicitors, he adduced no evidence to support that claim. At the hearing on 13 June 2023, the respondent claimed the funds were very shortly to be provided to him from a lender. He thought the lender was C Bank. He told me he could produce documents that afternoon regarding the loan. He then said he could produce them by the next day, or the end of the week. He then intimated he should have approval within the next few weeks. However, no documents have been provided to my chambers in the seven weeks since the hearing.
Comparable sentences
I must ensure the sentence is no more severe than necessary to meet the purposes of the sentencing. It must also be proportionate to the gravity of the contravention. I must also have regard to the range of sentences imposed in similar matters.
In Laffy & George [2012] FMCAfam 775 the husband breached an order made by Cassidy FM (as she then was) requiring him to deliver up a BMW motor vehicle that he sold, unbeknownst to the Court, whilst her Honour’s interim decision was reserved. He did not deliver the BMW. The husband was also in breach of orders requiring him to make payments in connection to real properties. The trial judge observed that the husband had available to him funds that would have discharged his obligations under Cassidy FM’s orders, but had chosen to expend those funds on other items. The husband was sentenced to three months imprisonment.
In Gaines and Gaines [2011] FMCAfam 485, the Court imposed a sentence of four months imprisonment for six breaches of final property orders, where the husband’s conduct had whittled away the asset pool, and paid funds to his girlfriend, such that there were insufficient assets remaining to meet the wife’s entitlements under final property orders.
In Giddens & Giddens [2016] FCCA 3201 the Court imposed a six month jail term, to be suspended after two months, with the respondent to enter a bond with a surety of $5,000, and on the condition he be of good behaviour. In that matter, the respondent received a compensation payment very shortly after separation, which he used to purchase two motor vehicles, amongst other things. He was restrained from selling one of the vehicles, which he sold in breach of that order. Hughes J regarded the respondent’s behaviour as “an unambiguous challenge to the Court’s authority” [25]. The proceedings before the Court were contempt and not contravention proceedings.
In Forlan & Forlan (No 2) [2017] FamCA 936, the respondent had been found guilty of 46 contraventions, selling and disposing of multiple assets despite orders restraining him from doing so, or in circumstances where he failed to meet the conditions surrounding any sales as set out in various orders. The trial judge noted that the orders breached were those directed at preserving the subject matter of the substantive proceedings. A two month prison sentence was imposed, but suspended on the basis that the respondent enter into a two year bond with the condition he be of good behaviour and comply with all orders of the Court. In that matter, there were ongoing orders – including that he was obliged to make regular payment to the wife – with which the respondent would need to comply as a condition of the bond.
Assessment of the objective seriousness of the conduct
This is a very serious offence. However, in my view, it is not so egregious that a term of 12 months imprisonment is appropriate, as sought by the applicant.
General or specific deterrence
In relation to specific deterrence, the imposition of a serious penalty is more likely to secure the respondent’s compliance with any future orders made by this Court or by the Federal Circuit and Family Court of Australia (Division 2). The final property determination has not yet been made.
In relation to general deterrence, there is force in the submissions made by counsel for the applicant that a term of imprisonment will provide a clear and appropriate message that Court orders for injunctive relief, especially those aimed to preserve the asset pool pending final determination by the Court, must be complied with. The authority of the Court to make effective orders must be upheld.
A term of imprisonment will, in my view, deter not only the applicant, but will also deter other potential contravenors from similar breaches. It would discourage others from replicating the respondent’s behaviour, and also demonstrate that the Court will enforce its orders and treats a failure to comply with it orders very seriously.
Rehabilitation
This consideration does not loom large in the particular circumstances of this case.
Mitigating and aggravating factors
The respondent did not provide any credible exculpatory evidence. Nor did he provide any acceptable explanation for his conduct in breaching the two orders. He expressed little contrition or remorse. He continued to dispose of the WorkCover funds after the orders of Harland J.
The respondent has had ample opportunity to endeavour to raise funds and comply with the orders. The Contravention Application was filed over 12 months ago.
I understand the parties were having some discussions to resolve the matter. However, I am not aware of the specifics as to any offers that were made. At any rate, as already observed, the respondent has not made any attempts to purge his contravention by paying the funds, or any part of the funds to the applicant’s solicitors. The entire $200,000 remains unpaid.
The consequences of the respondent’s contravention are significant. His disposal of the entirety of the WorkCover funds likely defeats the applicant’s claim for any entitlement to those monies. Other than a motor vehicle, the respondent has no other assets or financial resources from which any adjustment can be made in her favour, should that be the determination of the Court. Whilst the respondent said he would be able to pay the applicant whatever she is determined to be entitled to as a result of any property order that is ultimately made, he did not adduce any evidence that he had any capacity to do so.
I am aware that the respondent has recently had a young child. A term of imprisonment will mean he is absent from the life of that young child and his partner whilst he is incarcerated. The respondent did not provide me with any other evidence as to his circumstances, or as to his physical or mental health.
The respondent did plead guilty. However, he only did that eight months after the application was issued, part way through the hearing, after the evidence had closed.
CONCLUSION
The respondent’s conduct indicates a scornful attitude towards the orders of the Federal Circuit and Family Court of Australia (Division 2), and to the applicant. It is not an attitude that can be tolerated. It is essential for the proper working of our Court system that orders be obeyed. If that does not occur, the whole system will break down.
I do not agree that the respondent should be imprisoned for 12 months. I am of the view that an appropriate term of imprisonment is for three months, in respect of both the contraventions. He will be released at the end of that three month period or upon him making the payment to the applicant’s solicitors of $200,000, whichever is the sooner.
I am satisfied that the total sentence is commensurate with the seriousness of the contraventions and appropriate in all the circumstances.
I have considered permitting the respondent a further, short period of time to make the payment to the applicant’s solicitors. I see limited utility in doing so. The order of the Chief Justice to preserve $200,000 of the WorkCover monies was made over 20 months ago. The order of Harland J that he pay the funds to the applicant’s solicitors was made 14 months ago. The Contravention Application has been on foot for over 12 months. At the hearing in January this year, the respondent admitted to the contraventions. In the seven months that have elapsed, he has not, since that hearing, preserved or provided any funds even in partial compliance with the orders of the Chief Justice or Harland J.
However, in light of the respondent’s statements to me that he was in the process of making an application to lenders, I will give him one further, short period to purge the contravention. If the payment has not been made by the expiration of that period, a warrant will be issued for his arrest.
COSTS
The applicant sought her costs in relation to this application on an indemnity basis. She provided a copy of her costs agreement. Those have been calculated at $32,471.59 for solicitor’s fees and at $22,750 for counsel’s fees. Alternatively if calculated according to scale those amounted to $16,946.05 plus additional amounts “to be determined” for three items concerned with drafting the affidavit, and a further $9,981.92 for counsel’s fees.
The making of a costs order was opposed by the respondent.
Should a costs order be made?
Section 117(1) of the Act sets out the usual rule that parties bear their own costs. Pursuant to s 117(2), however, the Court can depart from that usual rule if there are circumstances that justify that departure, and make such order as to costs as it considers just.
When considering whether to make a costs order, if any, I must have regard to the considerations set out in s 117(2A).
In terms of the parties’ financial circumstances, the respondent’s Financial Statement says he earns about $1,800 per week. However, in his submissions made in June 2023, the respondent said he was no longer earning anything. Other than a vehicle worth around $39,000, he said he has no other assets or resources. He has re-partnered. The respondent deposed that his partner earns no income. They have recently had a baby. Of course, impecuniosity is not a bar to making a costs order. I note further that the respondent had the benefit of all the WorkCover monies from August 2021, save for the $50,000 paid as child support.
The applicant earns $962 per week. She receives some government support. She has re‑partnered and receives financial assistance from her new partner. She owns a property in Suburb D with equity of around $650,000. She has modest superannuation. She has the sole care of the parties’ two children, X and Y who are aged 8 and 6. X was diagnosed with autism and requires ongoing support, treatments and therapies.
Neither of the parties are in receipt of legal aid.
It is plain the respondent’s conduct as a litigant has been extremely poor. The proceedings were brought following the respondent’s contravention of Court orders to preserve the asset pool pending final resolution. He has reduced the pool of assets, which could defeat the applicant’s claim for substantive relief.
The respondent filed an objection to the subpoena issued by the applicant’s solicitors, which was subsequently dismissed.
The matter was listed for hearing before me on 25 November 2022. The respondent claimed he had COVID-19 and was not able to attend. He was ordered to adduce medical evidence corroborating his illness and inability to attend Court that day. He did not do so.
The respondent did not personally attend Court on 1 December 2022 despite orders requiring he do so. Orders were made for him to personally attend on 13 January 2023, and to adduce medical evidence explaining his non-appearance on 25 November 2022 and 1 December 2022. He was also ordered to pay the applicant’s costs fixed at $4,100 within 28 days. He has not adduced medical evidence. At best he produced a photograph of a positive RAT test with nothing identifying the date of the test, or the person who took it. He has not paid the applicant’s costs.
When the evidence commenced on 13 January 2023, the respondent initially said he had a reasonable excuse. At the commencement of the second day of the hearing, he amended his plea, and formally acknowledged he had contravened the orders as asserted without reasonable excuse. By this time the applicant had incurred substantial legal fees.
When the matter resumed on 13 June 2023, the respondent was not physically present at Court. He said he had understood the matter was not listed until 14 June 2023. The matter was able to proceed with the respondent participating by telephone.
There was no criticism made of the applicant’s conduct.
The proceedings were necessitated entirely by the failure of the respondent to comply with the orders of the Court.
The respondent has been wholly unsuccessful in the proceedings, save that I note the applicant proceeded with two rather than three counts as set out in her application.
I am not aware of the terms of any offers made. I do note that the applicant wrote to the respondent in May 2022 advising of her intention to bring the contravention proceedings in circumstances where the funds were not paid in accordance with the orders of Harland J. The respondent did not provide a substantive response to that correspondence.
It is, in my view, clearly a matter in which there are circumstances that justify a departure from the usual rule, and instead an order be made as to costs. The contravention proceedings are brought wholly as a result of the respondent’s failure to comply with orders. The contraventions have been admitted. No reasonable excuse was made out, and no reasonable explanation for the contraventions was proffered. They are serious contraventions, which could defeat the applicant’s substantive application.
On what basis should a costs order be made?
If an order for costs is to be made, it will usually be on a party/party basis. The applicant seeks an order for indemnity costs. This is a very great departure from the usual standard, and should only be imposed in exceptional circumstances (Kohan and Kohan (1993) FLC 92-340; Prantage & Prantage (2013) FLC 93-544).
Sheppard J provided some examples of circumstances that might justify the awarding of indemnity costs in the case of Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225. Relevantly, one such example is where there has been misconduct causing loss of time to the Court and to the other parties.
Certainly the respondent’s behaviour has been extremely poor. He has breached Court orders. He has delayed proceedings. He has diminished the asset pool in contravention of orders that sought to preserve the pool. Had he complied with the clear orders of the Court, these proceedings would not have been necessary. Conversely, the applicant has acted in an entirely appropriately manner. She also has the sole care for the parties’ young children, one of whom has special needs. She would not have incurred the legal costs involved in the contravention proceedings but for the respondent’s flouting of the Court orders.
In my view there is a strong argument for costs being awarded on a more generous basis than party/party calculated according to scale. However, I am not satisfied there are circumstances that enliven my discretion to award indemnity costs.
Rules 12.17 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) allows me to fix an amount for costs. In making an order under r 12.17(1), as I am, I may consider:
(a) the importance, complexity or difficulty of the issues;
(b) the reasonableness of each party’s behaviour in the proceeding including by having regard to the matters set out in subrule 12.08(2);
(c) the rates ordinarily payable to lawyers in comparable proceedings;
(d) whether a lawyer’s conduct has been improper, unfair, unreasonable or disproportionate;
(e) the time properly spent on the proceeding, or in complying with pre-action procedures;
(f) whether expenses (paid or payable) are fair, reasonable and proportionate.
I have already referred to the respondent’s poor behaviour. The applicant had to prepare a Contravention Application, supported by an affidavit, as well as a Financial Statement and affidavits of her solicitors. The respondent’s non-attendance at Court on occasion delayed the proceedings, and resulted in additional appearances being necessary. Had the respondent admitted the contraventions at an earlier stage, the applicant’s costs would have been reduced.
Taking all these matters into account, and in the exercise of my very broad discretion, I have determined it is appropriate to make a costs order against the respondent in the sum of $20,000. That is in addition to the costs order that was made as a result of the respondent’s non‑attendance at the hearing on 1 December 2022.
The parties are yet to resolve their s 79 proceedings. Those matters will proceed before Harland J. I will delay the payment of those costs until judgment is delivered in the final property proceedings.
I certify that the preceding one hundred and one (101) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Carter. Associate:
Dated: 1 August 2023
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