New South Wales Supreme Court CITATION : Yeshiva Properties No. 1 Pty Limited & Ors v Lubavitch Mazal Pty Limited [2003] NSWSC 778 HEARING DATE(S) : 20/08/03 JUDGMENT DATE : 20 August 2003 JURISDICTION: Equity Division JUDGMENT OF : Einstein J DECISION : Hearing dates for motion for contempt vacated. CATCHWORDS : Practice and procedure - Alleged contemnor unable to furnish instructions or to attend on hearing of motion for contempt LEGISLATION CITED : Supreme Court Act CASES CITED : Attorney General v Times Newspapers Limited 1973 Vol 3 All ER 54 Yeshiva Properties No 1 Pty Ltd v Lubavitch Mazal Pty Ltd [2003] NSWSC 615. Lubavitch Mazal Pty Limited (Applicant) Yeshiva Properties No. 1 Pty Limited Yeshiva Properties No. 2 Pty Limited PARTIES : Yeshiva Properties No. 3 Pty Limited Yeshiva Properties No. 4 Pty Limited Yeshiva Properties No. 5 Pty Limited Yeshiva Properties No. 6 Pty Limited Pinchus Feldman (Respondents) FILE NUMBER(S) : SC 5361/02 CRC Newlinds (Applicant) COUNSEL : SJ Burchett (Pinchus Feldman) No appearance for Yeshiva Properties Companies Schetzer Brott & Appel (Melbourne), Kemp Strang (Agent) (Applicant) SOLICITORS : McCabe Terrill Lawyers (Pinchus Feldman) No appearance for Yeshiva Properties Companies IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION Einstein J Wednesday 20 August 2003 ex tempore Revised 25 August 2003 5361/02 Yeshiva Properties No 1. Pty Ltd & Ors v Lubavitch Mazal Pty Ltd JUDGMENT The Proceedings 1 Proceedings SC 5361/02 were determined by Young CJ in Eq by Judgment dated 8 July 2003 Yeshiva Properties No 1 Pty Ltd v Lubavitch Mazal Pty Ltd [2003] NSWSC 615. 2 The essential background may be seen in the short outline given in the judgment in paragraphs 2 to 4: "The plaintiffs, a group of corporations owning properties in the Eastern Suburbs of Sydney which are primarily used for the purposes of operating religious schools and a synagogue, sue the defendant for declarations that the defendant is not entitled to realize those properties as their mortgagee until some rabbinical arbitration has run its course. Alternatively they seek a declaration that the defendant is estopped from so realizing those properties. The plaintiffs are trustees of the Sydney Talmudical College Building & Maintenance Fund which carries on religious and educational activities under the name "Yeshiva" in accordance with the principles of Orthodox Judaism practised by the Lubavitch movement. The plaintiffs are under the day to day control of one Rabbi Pinchus Feldman. The defendant is the trustee of The Lubavitch Mazal Trust established by deed of settlement of 21 December 1994 and is under the effective practical control of Rabbi Joseph Gutnick. The defendant was, in fact, only incorporated on 21 December 1994. Rabbi Feldman and Rabbi Gutnick are brothers-in-law." The two issues litigated during the final hearing 3 There were essentially two issues raised by the plaintiffs in resisting the defendant's demands: · a claim that the parties had agreed that their dispute be arbitrated by a rabbinical court and that the defendant should be restrained from proceeding to enforce its demands until that arbitration has concluded ["issue 1"]; · a claim that the defendant was estopped from contending that the arrangement was one of loan; rather the five million dollar amount was said to be a gift to the plaintiffs ["issue 2"]. 4 The second issue concerned certain transactions entered into between the plaintiffs and the defendant (described in the judgment at paragraphs [5] –[16]), one parameter of which involved the assignment by the Commonwealth Bank of Australia, which had been a mortgagee of relevant properties, to the defendant of: · promissory notes signed by the plaintiffs; and · mortgages over 10 parcels of real estate owned by the plaintiffs referred to in the proceedings as "the core properties". 5 Justice Young found for the defendant in relation to each of the two issues. The Notices of Motion presently before the court 6 A Notice of Motion filed on 23 July 2003 has been fixed to be heard by the Court on Monday and Tuesday next the 25th and 26th August relevantly seeking: · A declaration that each of Yeshiva Properties No. 1 Pty Limited, No. 2 Pty Limited, No. 3 Pty Limited, No4 Pty Limited, No 5 Pty Limited and No. 6 Pty Limited and Rabbi Feldman are in contempt of the Court upon the grounds set out in the Statement of Charge annexed to the notice of motion; · Sequestration Orders against the respective estates of each of the plaintiffs; · An order that a Receiver be appointed to the whole of the assets of each of the plaintiffs; and · Such further or other punishment orders against the plaintiffs as the Court considers fit. The interlocutory regime of relevance 7 Issue 1 had been dealt with prior to the final hearing by a combination of interlocutory injunctions or consent undertakings which apparently had the effect of freezing proceedings before the Rabbinical Court. 8 Following the handing down of the judgment by Justice Young, his Honour dissolved the injunctions and released the consent undertakings, in his Honour's words doing so: "on the basis that I was functus officio and that ordinarily interlocutory undertakings come to an end when the final decision in the litigation is handed down, and furthermore I just did not imagine that highly principled religious leaders of an organisation would do anything else but respect the letter and the spirit of the decision of the Supreme Court of New South Wales to which they had both submitted." [at paragraph 8] Chronology up to delivery of judgment 9 In the course of the judgment Justice Young set out the short chronology of relevance up to the point in time when the judgment was delivered. Clearly in terms of the hearing of the Notice of Motion filed on 23 July 2003, the events following the delivery of the judgment will form the central focus. The statement of charge in this regard includes the following allegations: · that on or about 20 July 2003 the plaintiffs, through its servants and agents, and Rabbi Feldman interfered with the due administration of justice by requesting and receiving from the Rabbinical Court of Tel Aviv, Israel, a Decision referred to as a "Kesav Siruv" (Writ of Contempt of Court) against Joseph Isaac Gutnick in connection with these proceedings ["the 20 July Decision"] [Statement of Charge paragraph 9]; · that on or about 21 July 2003 the plaintiffs, through its servants and agents, and Rabbi Feldman interfered with the due administration of justice by disseminating or causing the dissemination (by both facsimile and electronic e-mail) of the 20 July Decision, together with an English translation thereof, to third parties including journalists employed by the Australian Jewish News and the London Jewish Chronicle and other persons known and unknown [Statement of Charge paragraph 10]; · that on or about 21 July 2003 the plaintiffs, through its servants and agents, and Rabbi Feldman interfered with the due administration of justice by disseminating or causing the dissemination (by both facsimile and electronic e-mail) of the 20 July Decision, together with an English translation thereof and a media release (headed "Preference for Arbitration by Religious Law", to third parties including journalists employed by the Sydney Morning Herald [Statement of Charge paragraph 11]. 10 The Statement of Charge then alleges that the conduct [described in the Statement of Charge paragraphs 9, 10 and 11] engaged in by the plaintiffs, through its servants and agents, and Rabbi Feldman, was likely to, had the tendency to, or was calculated to interfere with the due administration of justice by: · punishing Rabbi Gutnick, or threatening Rabbi Gutnick, with punishment, for having caused the defendant to participate in the proceeding; and/or · punishing Rabbi Gutnick, or threatening Rabbi Gutnick with punishment, for having given evidence in the proceedings adverse to the interests of the plaintiffs; and/or · pressuring or inducing Rabbi Gutnick, under threat of punishment, to procure the defendant to abandon or stay the judgment and orders given in favour of the defendant in the proceedings and to instead submit to a rehearing of the proceeding in a rabbinical Court applying Jewish law; and/or · punishing Rabbi Gutnick, or threatening Rabbi Gutnick with punishment, if Rabbi Gutnick sought an injunction from the court to restrain the plaintiffs and or Rabbi Feldman from enforcing or seeking to enforce the 20 July Decision; and/or · holding Rabbi Gutnick up to public obloquy and generally threatening harm to Rabbi Gutnick's reputation in connection with the proceeding. The Notice of Motion to vacate 11 There is before the Court a notice of motion filed by and on behalf of Rabbi Feldman seeking a vacation of the dates fixed for the hearing of the notice of motion for contempt. 12 On the 18th August 2003 proceedings were commenced by Nelvet Pty Limited seeking orders inter alia for the appointment of a provisional liquidator to each of those companies. On the same day Justice Austin made interlocutory orders on an ex parte basis restraining the plaintiffs from in any way creating, paying or discharging any indebtedness except debts incurred in respect of reasonable legal expenses of defending any proceedings up to $10,000.00, any liability to the Australian Taxation Office or any ordinary business expense up to $30,000.00 per month. 13 The Court has been informed from the bar table that overnight the directors of the companies have appointed administrators to the companies and that during the course of this morning [and on going as this judgment is delivered], there is an application being pursued before Justice Austin by Lubavitch Mazal Pty Limited for the appointment of provisional liquidators. 14 Appearing before the Court on the application to vacate the hearing date have been Mr Burchett of counsel for Rabbi Feldman and Mr Newlinds of counsel for Lubavitch Mazal Pty Limited. 15 It has been common ground at the bar table, as I have understood it, that the Court ought approach the application for leave to vacate the hearing dates upon the assumption that either by dint of the administrator appointment or should Justice Austin so order, by dint of the appointment of a provisional liquidator to the above described companies, the further prosecution of the contempt motion at least in so far as the company respondents to the motion are concerned, will be stayed. 16 The administrators have by Mr Burchett passed across to the Court a request that they be permitted at least a period of thirty days in which to investigate the affairs of the companies and in which to be in a position, on an informed basis, to indicate to the Court what approach is sought to be taken to the contempt motion by the companies. 17 To my mind the now position of the companies is of very special significance in terms of the application to vacate the hearing date. By definition this is a motion to have a declaration that each of those companies, as well as Rabbi Feldman, are in contempt of Court and the Overriding Purpose Rule in the Supreme Court Rules and the provisions of section 63 of the Supreme Court Act obviously make it necessary, unless it were absolutely impracticable for this to be achieved, for the motion to be heard and determined against all respondents at the same time. 18 Another and extremely significant basis put forward by Rabbi Feldman's legal representatives in support of the application to vacate the hearing date concerns Rabbi Feldman's current state of health as is evidenced by two reports tendered to the Court by Doctor John Albert Roberts. The first of those reports is dated 28 July 2003 and the second of the reports is dated 18 August 2003. 19 The first of those reports referred to Rabbi Feldman's headaches, dizziness and a feeling as if he would collapse, all of the above being associated with extreme anxiety. The duration of that symptomatology having been for some months in response to circumstances but having reached a severe degree over the two weeks prior to 28 July 2003. Rabbi Feldman in this report described to Doctor Roberts a feeling of being unable to cope, this being attributed both to circumstances and an inability to sleep. At that time, that is to say 28 July 2003, Doctor Roberts anticipated that with appropriate management, should the Court require Rabbi Feldman to give evidence, he would be able to do so within two weeks. The report was apparently given against a background in which Rabbi Feldman may have been due to appear in Court on that day, Doctor Roberts opinion being that he would be incapable of so doing since his current agitation would prevent him from effectively answering matters put to him. 20 The later report of 18 August 2003 deals with Doctor Roberts opinion that Rabbi Feldman was not currently fit by virtue of his state of mind to attend Court but would on grounds of probability be fit to do so within fourteen days. Doctor Roberts refers in his report to the current concerns of Rabbi Feldman and continues: "I attended him at his home and found him in a distraught state – in view of his state of mind in which he is currently incapable of addressing the serious matters that he has to address and because of my concern in regard to his state of health both physical and psychiatric I have suggested that he be admitted to (and the hospital is referred to) for complete rest." 21 The health of Rabbi Feldman is an obviously extremely significant circumstance in terms of the current fixture of the motion for contempt on Monday and Tuesday of next week. Mr Lacy, solicitor has deposed that as a result of Rabbi Feldman's medical condition, he has been unable to obtain any instructions from him and has been unable to speak with Rabbi Feldman at all for more than ten days. Mr Burchett from the bar table submitted and I accept, that the difficulties which inhere in the Court commencing and continuing the motion for contempt on Monday and Tuesday in the absence of Rabbi Feldman being in a position to furnish instructions to his solicitors and counsel constitute a very strong ground indeed for the application to vacate the hearing date being granted. 22 Further matters relied upon by Mr Burchett in support of the proposition that the Court should vacate the hearing date include the evidence before Court on information and belief from Mr Lacy that he has been informed by Shalom Feldman and believes that he and other family members and associates of the plaintiffs have made inquiries but have been unable to find an appropriate independent expert in the time available due to various other demands on their time by reason of matters earlier referred to in the affidavit and the fact that the parties are well-known throughout the community. The matters earlier referred to in the affidavit identifying the events since 30 July 2003 travel the distance of the request for particulars of the Statement of Charge, the defendant filing and serving written submissions with respect to interlocutory relief on 4 August, the answering of particulars by the defendant on 8 August, the 11 August 2003 appearance by the plaintiffs before the Court of Appeal on an application for review of Justice Meagher's refusal to grant a stay of the orders made by Justice Young on 16 July granting judgment in favour of the defendant on the cross claim in the proceedings and possession of the properties the subject of the proceedings. Further reference is made to the 12 August 2003 urgent application before the Duty Judge in Equity, Mr Justice Gzell seeking to restrain enforcement of the Writs of Possession and to other applications before Justice Gzell. 23 Further reference is made in the affidavit to the 13 August 2003 Writs of Execution executed by the Sheriff of New South Wales with respect to a number of identified properties some of which were used for synagogue facilities, classes of the rabbinical college, scripture and Sunday school, adult education classes, administration offices for the Yeshiva Centre and Schools, a study hall and library of the rabbinical college, the synagogue for the Israeli expatriate community, communal hall, function hall and auditorium, a dormitory used for accommodation for the rabbinical seminary accommodating up to twenty students, another similar dormitory and a building used for the Yeshiva Boys High School. Over the past week, so Mr Lacy deposes and I accept, significant time and resources have been put into the vacating of those properties. Significance of the Motion for Contempt 24 The Notice of Motion which is presently fixed for 25 and 26 August raises an extremely significant issue in so far as the interests of both groups of parties are concerned as well as raising an extremely significant issue in terms of the public interest. 25 The general mischief against which all contempts of Court are directed was identified by Lord Simon in Attorney General v Times Newspapers Limited 1973 Vol 3 All ER 54 at 75 as follows: "The law of contempt is a body of rules which exists to safeguard another…institution of civilised society. It is the means by which the law vindicates the public interest in due administration of justice – that is in the resolution of disputes, not by force or by private or public influence, but by independent adjudication in courts of law according to an objective code. 26 His Lordship had earlier at page 71 observed that: "The provision of a system for the administration of justice by courts of law and the maintenance of public confidence in it are essential if citizens are to live together in peaceful association with one another. 'Contempt of court' is a generic term descriptive of conduct in relation to particular proceedings in a court of law which tends to undermine that system or to inhibit citizens from availing themselves of it for the settlement of their dispute. Contempt of court may thus take many forms." 27 The applicant in filing the notice of motion seeking a declaration that the plaintiffs and Rabbi Feldman are in contempt of the Court has and as I understand it intends to proceed with the prosecution of a motion of high significance to both parties. The respondents to that motion totally negate the proposition that there has been any contempt of court committed and intend to resist the motion by the adducing of evidence. 28 Clearly enough it is important for the Court to continue to case manage the notice of motion with the view to the motion being heard at such time as is practicable in the interests of justice. 29 The applicant on the motion, Lubavitch Mazal Pty Limited, has made plain that it consents to the vacation of the days now fixed for hearing of the motion on the basis and only on the basis that it is seen as invidious for the Court to proceed with the entertaining of the motion where Rabbi Feldman's health, as evidenced by the medical reports to which I have referred, are accepted as making it impossible for him to furnish instructions or otherwise to participate in an application of the highest moment in so far as he personally is concerned. 30 I am satisfied that the proper exercise of the Court's discretion is in favour of the making of the orders vacating the hearing dates presently fixed and that the appropriate course is to give directions for the proceedings to be stood over to Friday 19 September 2003. Other directions 31 Mr Burchett on behalf of his client consented to the giving of directions: · that Rabbi Feldman on or before 19 September 2003 file and serve expert evidence sought to be relied upon in response to the motion. · that Rabbi Feldman file and serve any lay evidence upon which his client intends to rely in response to the Notice of Motion for contempt on or before the 19 September 2003. 32 I vacate the hearing dates and give each of those directions. Costs are reserved. 33 The Court directs the applicants on the motion of contempt to communicate to the administrators [and to any provisional liquidator appointed] that without making any order in this respect, the Court would be hopeful that on or before the 19th September 2003, the administrators and/or any provisional liquidator will be in a position to present a report to the Court as to the position of the Yeshiva Property Companies in relation to whether they propose to resist the motion or otherwise and if so in what manner, seek to have the Court treat with the claims made against the Yeshiva Company respondents on the motion. 34 The notice to produce which the applicants on the motion have served may be stood over to the 19th September 2003 to be called on that day. 35 The proceedings are stood over to 19 September 2003. I certify that paragraphs 1 - 35 are a true copy of the reasons for judgment herein of the Hon. Justice Einstein given on 20 August 2003 ex tempore and revised on 25 August 2003 ___________________ Susan Piggott Associate 25 August 2003 Last Modified: 09/15/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.