New South Wales Supreme Court CITATION : Leung v Good Friend Development Pty Ltd [2008] NSWSC 142 HEARING DATE(S) : 26/02/08 JUDGMENT DATE : 26 February 2008 JURISDICTION : Equity Division JUDGMENT OF : Barrett J EX TEMPORE JUDGMENT DATE : 26 February 2008 DECISION : Motion for punishment for contempt dismissed with costs CATCHWORDS : PROCEDURE - contempt, attachment and sequestration - alleged breach of consent order requiring payments of money - where terms of order uncertain or ambiguous - resort to surrounding circumstances - no real clarification provided by surrounding circumstances - no alternative but to construe order according to its terms - motion dismissed LEGISLATION CITED : Supreme Court Rules 1970, Part 55 rules 7, 9 Uniform Civil Procedure Rules 2002, rule 7 schedule 2, rule 40.7 CATEGORY : Principal judgment Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1 CASES CITED : Kirkpatrick v Kotis (2004) 62 NSWLR 567 Leung v Good Friend Development Pty Ltd [2007] NSWSC 713 Rogers v Wentworth (NSWCA, unreported, 18 April 1988) Pin Ko Leung - First Plaintiff Fook Cheung Leung - Second Plaintiff PARTIES : Good Friend Development Pty Limited - First Defendant Kim Hung Kwong (aka Sherman Kwong) - Second Defendant Sandy Kwong (aka Wai Kwan Ng) - Third Defendant Belinda Wong (aka Yuk Ling Belinda Wong - Fourth Defendant FILE NUMBER(S) : SC 2906/07 COUNSEL : Mr S Y Reuben - Plaintiffs Mr G W McGrath - Defendants SOLICITORS : Micah Legal Services - Plaintiffs Ren Zhou Lawyers - Defendants IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION BARRETT J TUESDAY 26 FEBRUARY 2008 2906/07 PIN KO LEUNG v GOOD FRIEND DEVELOPMENT PTY LTD JUDGMENT 1 The plaintiff in these proceedings seeks to have the first defendant, a company, adjudged guilty of contempt of court by reason of an alleged breach by it of an order made by the court on 1 June 2007. 2 On that day several orders were made by consent of the parties. Among them was an order directed to the first defendant, being order 4 in these terms: "That the First Defendant be ordered to pay by 8 June 2007 the amount of $2,300 to loan number MN34.0021.001.30101.2551 held with Perpetual Trustees Victoria Limited on account of the Plaintiffs and to continue to make monthly payments of $2,300 to the said loan account on account of the Plaintiff on or before the 17th day of each calendar month or the banking business day prior to that date in each month until 5pm on 26 June 2007." 3 It appears to be accepted that the first defendant made three payments to the nominated account, one of $2,150 on 7 June 2007, a second also of $2,150 on 18 June 2007, and a third of $300 on 22 February 2008. 4 The plaintiff's contempt application is made by a notice of motion filed on 18 December 2007. The statement of charge called for by Part 55 rule 7 of the Supreme Court Rules 1970 (which by virtue of rule 1.7 and schedule 2 of the Uniform Civil Procedure Rules 2005 prevails) is, as that provision requires, subscribed to the notice of motion by being physically included in it. The statement of charge is as follows: "1. The First Defendant is guilty of contempt of the Court by its breach of Order 4 of the Orders made by consent on 1 June 2007. 2. The said Order 4 provided as follows:- 'That the First Defendant be ordered to pay by 8 June 2007 the amount of $2,300.00 to Loan No. MN34.0021.001.30101.2551 held with Perpetual Trustees Victoria Limited on account of the Plaintiffs and to continue to make monthly payments of $2,300.00 to the said loan account on account of the Plaintiff on or before the 17th day of each calendar month or the banking business day prior to that date in each month ...'. 3. The First Defendant caused the payments prescribed by Order 4 of 1 June 2007 to be made only up to and including 17 July 2007 and only in the amount of $2,150.00 per payment. 4. Since 17 July 2007 the First Defendant has ceased to make the said payments prescribed by Order 4 and has failed and/or refused to make same to date." 5 It will be seen immediately that paragraph 2 of the statement of charge, which purports to set out order 4 made on 1 June 2007, in fact contains only part of order 4. It omits everything appearing after "that day in each month", that is, "until 5 p.m. on 26 June 2007". The statement of charge is misleading in this respect. 6 However, the order concerned was a consent order and the first defendant was a party to the consent. It may therefore be inferred that the first defendant was aware of the terms of the order actually made. For that reason it may also be inferred that there was little, if any, likelihood that the first defendant was in fact misled by the obvious deficiency in the statement of charge. 7 It is accepted by the first defendant that the notice of motion incorporating the statement of charge was duly served as required by Part 55 rule 9 of the Supreme Court Rules. 8 As to service of the order disobedience to which is alleged, the plaintiff contends, and the first defendant does not seek to deny, that because the order is a consent order, rule 40.7(4) of the Uniform Civil Procedure Rules makes inapplicable the precondition concerning service of the order that would otherwise arise under the earlier part of rule 40.7. 9 The basis upon which the first defendant seeks to defend the charge of contempt is that all payments required by the order to be made have been made, albeit that each of the payments of $2,150 was short by $150 which deficiency was, however, made good by the payment of $300 on 22 February 2008. In those circumstances, it is said, any contempt was minimal in that each of the first to payments was slightly deficient; and that contempt was purged by the subsequent payment of the $300. 10 There is thus squarely in issue the meaning of order 4 and what the first defendant was required to do in conformity with it. 11 On its face and according to its terms, the requirement the order imposed was that a payment of $2,300 be made by 8 June 2007 and that "monthly payments" each of $2,300 be made on or before the 17th of each month "until 5 p.m. on 26 June 2007". 12 It was odd for an order made on 1 June 2007 to contemplate monthly payments on or before the 17th of each month until 26th of June 2007. The only 17th day of a month that would fall before 26 June 2007 was 17 June 2007, so that to contemplate several monthly payments rather than a single payment, in addition to that to be made on 8 June, was something of a nonsense. 13 Mr Reuben submitted on behalf of the plaintiff that the order cannot be approached as what Campbell J called in Kirkpatrick v Kotis (2004) 62 NSWLR 567, a "freestanding piece of prose unaffected by surrounding circumstances". His Honour held in that case, referring to the decision of the Court of Appeal in Rogers v Wentworth (NSWCA, unreported, 18 April 1988) and other cases, that, in construing an apparently ambiguous court order, attention must be paid to the surrounding circumstances. He also observed that the court will not punish someone for disobeying its order unless the order directs in unambiguous terms what is to be done. 14 Campbell J also said (page 578): "In my view, the court approaches the question of whether the order is ambiguous with the caution appropriate to a type of litigation which could result in the defendant being punished — if an order is really not clear, it is unjust for someone to be punished for not obeying it. As well, though, the court approaches the question of whether the order is ambiguous on the basis that the recipient is expected to try to understand it and obey it. If a person taking that approach to the order could be in real doubt about what it meant, in a respect which is relevant to the particular charge of contempt which is brought, the charge will fail. This means that there will sometimes be orders which a grammatical analysis would show to contain a syntactic ambiguity, but which are none the less enforceable if it is the type of ambiguity that has no real risk of misleading. There will sometimes be orders which contain a term which has multiple meanings, but where that semantic ambiguity has no real risk of misleading. If there were to be an order addressed to a promoter of musical groups not in any way to be involved in the advertising or promotion of a band under some particular name, the order would be enforceable notwithstanding that a "band" can sometimes be a rubber band, or a headband. " 15 The plaintiff contends that, in the light of surrounding circumstances, order 4 in this case should not be regarded as ambiguous. The surrounding circumstances on which the plaintiff relies centre on the fact that order 4 was made on the first return of an application for interlocutory injunctions. When the matter came before Brereton J as Duty Judge on that occasion, 1 June 2007, there was consent to interlocutory orders restraining various defendants in various ways "until further order", but on the basis that, as the orders also provided, the proceedings would come back to court on 26 June 2007 "for interlocutory hearing before the Duty Judge". 16 Just what was to be dealt with on 26 June 2007 "by way of interlocutory hearing before the Duty Judge" was not clear, given that interlocutory restraining orders had been made on 1 June 2007 "until further order". 17 In any event, the matter did come back before the Duty Judge, who was Palmer J, on 26 June 2007. The reason, as it emerged, is made clear by the first paragraph of Palmer J's ex tempore judgment delivered on that day, Leung v Good Friend Development Pty Ltd [2007] NSWSC 713. His Honour said: "On 1 June 2007, Brereton J made orders by consent restraining the Third and Fourth Defendants from dealing with a property at Bexley until further order. The matter has come back into the Duty List today because the Defendants wish to have that interim injunction dissolved." 18 Palmer J said that the first question before him was whether the plaintiffs had shown there was a serious question to be tried relating to the final relief sought. He held that there was not and dissolved the orders which, on 1 June 2007 had been made "until further order". The orders made by Palmer J did not impinge upon or affect order 4 of 1 June 2007 with which I am now concerned. 19 After 26 June 2007, the position was, in substance, that a regime of interim restraints that had been put in place by consent orders on 1 June 2007 was no longer in place, having been terminated on that day. 20 The position the plaintiff takes is that order 4 nevertheless continued in force and should have been understood by the first defendant to continue in force; and that this was so despite its own clear expression of an end date and the fact that the rest of the interlocutory consent regime had been terminated with effect from that end date. 21 In those circumstances, what assumption, one asks, should the first defendant have made about the true meaning of order 4: that it continued in force indefinitely so that monthly payments were required forever (or, at least, for the life of the particular loan to which the payments related); or that the obligation continued until further order? 22 I am not at all satisfied that the first defendant could or should have made either of those assumptions or, for that matter, any other assumption inconsistent with the words of the order, somewhat confusing though they were. In particular, I am not at all satisfied that the first defendant should have assumed that the order was to continue until further order, given that the application before the court on 1 June 2007 expressly sought an order until further order and that aspect of the order that was sought was obviously not incorporated into the order as made – in other words the application for an order "until further order" was obviously overtaken by the consent regime the parties adopted. 23 Mr Reuben submitted that subsequent correspondence demonstrates an acceptance by the first defendant of a liability to pay interest on the home loan account of the plaintiff. Paragraph 4 of a letter of 22 January 2008 from the first defendant's solicitors to the plaintiff's solicitors is said to show this in the following paragraph: "Our client requested to lodge the amount of $87000 back into the home loan account of the plaintiff, i.e. your client because this would eventually reduce the interest needed to be paid off by our client , as our client in anyway agreed to pay the debt of $290000 owed to your client. Please advise if this is acceptable. We can still draw cheque under your trust account as arranged, but later provide the order to release to loan account if acceptable." [emphasis added] 24 This passage cannot be seen to be unequivocally linked to the court order. The source of any obligation referred to by the words "needed to be paid" cannot be ascertained. 25 Mr Reuben also referred to the fact that, when the alleged non-compliance with the order was first raised by the plaintiff's solicitors on 19 October 2007 in a letter to the first defendant's solicitors, the immediate response of the latter solicitors on that day was to refer to their client's financial difficulties. It was only a month later, in a letter of 21 November 2007, that the point was taken that the order had expired on 26 June 2007. That correspondence in my view does not assist the plaintiff. The first defendant was late in taking the point. But it was taken. 26 Even allowing for the principles to which Campbell J referred and the need for a party subject to a court order to take a sensible approach dictated by the circumstances of the case to the interpretation of the order, I am not satisfied that the circumstances of this case are such that the first defendant could or should have proceeded on the footing that order 4 made on 1 June 2007, oddly and clumsily worded as it was, had any life or force beyond 26 June 2007. 27 For that reason the notice of motion by which the plaintiff seeks to have the first defendant punished for contempt is dismissed with costs. (Counsel addressed on costs) 28 The first defendant seeks an order that the costs be assessed and payable forthwith. Circumstances in which such an order may be made are summarised in Fiduciary Ltd v Morningstar Research Pty Ltd (2002) 55 NSWLR 1. I am not satisfied that any of those circumstances exist here. 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