Supreme Court New South Wales Medium Neutral Citation: Paccar Financial Pty Limited v Ian Menzies & Colleen Menzies [2015] NSWSC 501 Hearing dates: 26 February 2015 Date of orders: 04 May 2015 Decision date: 04 May 2015 Jurisdiction: Common Law Before: Rothman J Decision: (1) Ian Menzies, is guilty of contempt of this Court, in that in breach of the Order made and entered by this Court on 13 June 2013 whereby Ian Menzies and Colleen Menzies were ordered to deliver the property referred to in order (1) to Paccar Financial Pty Ltd within fourteen days, Ian Menzies failed to deliver the property referred to in order (1) to Paccar Financial Pty Ltd within 14 days or at all; (2) Colleen Menzies, is guilty of contempt of this Court, in that in breach of the Order made and entered by this Court on 13 June 2013 whereby Ian Menzies and Colleen Menzies were ordered to deliver the property referred to in order (1) to Paccar Financial Pty Ltd within fourteen days, Colleen Menzies failed to deliver the property referred to in order (1) to Paccar Financial Pty Ltd within 14 days or at all. Catchwords: CONTEMPT OF COURT – civil contempt – beyond reasonable doubt - refusal to surrender property – clear, deliberate and contumelious breach of court orders – first and second defendant guilty of the charge of contempt Legislation Cited: Supreme Court Rules 1970 Cases Cited: Advan Investments Pty Limited v Dean Gleeson Motor Sales Pty Ltd [2003] VSC 201 Anderson v Hassett [2007] NSWSC 1310 Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 161 CLR 98 Australian Consolidated Press Ltd v Morgan (1965) 112 CLR 483 Australian Securities and Investments Commission v Matthews [2009] NSWSC 77; (2009) 69 ACSR 559 Commonwealth Bank of Australia v Salvato (No 4) [2013] NSWSC 321 Menzies v Paccar Financial Pty Ltd [2013] NSWSC 283 National Bank (NAB) Ltd v Juric [2001] VSC 375 Metcash Trading Ltd v Bunn (No 5) [2009] FCA 16 Paccar Financial Pty Ltd v Menzies; Menzies v Paccar Financial (No 5) [2013] NSWSC 772 Pang v Bydand Holdings Pty Ltd [2011] NSWCA 69 Talacko v Talacko [2009] VSC 387 Witham v Holloway [1995] HCA 3; (1995) 183 CLR 525 Wyszenko v Wyszenko [2012] NSWSC 732 Category: Principal judgment Parties: P. Newton (Plaintiff) No appearance (First Defendant) Self-represented (Second Defendant) Representation: Counsel: P. Newton (Plaintiff) No appearance (First Defendant) Self-represented (Second Defendant) Solicitors: Mills Oakley Lawyers (Plaintiff) No appearance (First Defendant) Self-represented (Second Defendant) File Number(s): 2010/377702 Publication restriction: None Judgment 1. HIS HONOUR: By motion, notice of which was filed on 12 September 2014, the plaintiff, Paccar Financial Pty Ltd (hereinafter Paccar Financial), seeks an order pursuant to r 55.7 of the Supreme Court Rules 1970, to have the first and second defendants, Ian and Colleen Menzies, dealt with for contempt of court. The motion is supported by the affidavits of Andrew Brown sworn 10 September 2014 and 17 February 2015. 2. The plaintiff submits that the defendants are guilty of contempt for failing to comply with orders of the Court made on 13 June 2013 (the Orders): Paccar Financial Pty Ltd v Menzies; Menzies v Paccar Financial (No 5) [2013] NSWSC 772. 3. Attached to the motion is a Statement of Charge, identifying the allegations of contempt with respect to the first and second defendants and the relevant property, expressed as follows: "Ian Menzies is guilty of contempt of this Court in that in breach of the Order made and entered by the Court on 13 June 2013 (which was stayed for the period from 15 July 2013 until 24 September 2013) whereby Ian Menzies and Colleen Menzies were ordered to deliver the property referred to in order (1) to Paccar Financial Pty Limited within fourteen (14 days), Ian Menzies failed to deliver the property referred to in order (1) to Paccar Financial Pty Limited within 14 days or at all. … Colleen Menzies is guilty of contempt of this Court in that in breach of the Order made and entered by the Court on 13 June 2013 (which was stayed for the period from 15 July 2013 until 24 September 2013) whereby Ian Menzies and Colleen Menzies were ordered to deliver the property referred to in order (1) to Paccar Financial Pty Limited within fourteen (14 days), Colleen Menzies failed to deliver the property referred to in order (1) to Paccar Financial Pty Limited within 14 days or at all. …. (a) 1 x 2004 Vawdrey D Double Tautliner Trailer Chassis No XXXXX Registration XXXXX and 1 x 2004 Vawdrey B Double Tautliner Trailer Chassis No XXXXX Registration XXXXX (as set out in Loan Contract 7470-20393); (b) 1 x 2003 Kenworth K104 Prime Mover Chassis No XXXXX Engine No XXXXX Registration XXXXX (as set out in Loan Contract 7470-20394); (c) 1 x 2001 Barker B Double Trailer Chassis XXXXX Registration XXXXX and 1 x 2001 Barker B Double Trailer Chassis XXXXX Registration XXXXX (as set out in Loan Contract 7470-20395); and (d) 1 x 2003 Kenworth K104 Prime Mover Chassis XXXXX Engine XXXXX Registration XXXXX (as set out in Loan Contract 7470-20396)." 1. Thereafter, the defendants filed a Notice of Grounds of Defence to Charge, relying on the affidavits of Colleen Menzies sworn on the 9 December 2014 and 25 February 2015. 2. It is important to note in these proceedings, the defendants seek to rely upon and re-agitate a number of matters that are irrelevant to the issues before me. 3. The proceedings before me today were in the absence of the first defendant. His interests were represented by the second defendant. The first defendant did appear shortly before morning-tea break to speak to the second defendant and, at that time, stated to the Court that he was being adequately represented. I am satisfied that his purported absence in the proceedings was voluntary and that he was aware of the proceedings and available to attend, but chose not to do so. In addition, during the proceedings, the second defendant tendered an apology letter on behalf of the first defendant, which was addressed to the Registrar of the Court and dated 27 October 2014 (Exhibit 1). 4. Through Exhibit 1, the first defendant attempted to shed light on the reasons why he believes he is "unable" to appear before the Court. He also acknowledges the Orders made on 13 June 2013 and states why he cannot comply. The first defendant bases his non-compliance with the Orders on three main grounds: provocation; his psychiatric condition; and, the plaintiff's disentitling conduct. 5. In summary, the first defendant expresses that he requires the trucks to earn an income and has offered to Paccar Financial, without any success, to tender their market value and repurchase the property. He also suggests that he has not caused any actual or financial harm to the plaintiff, does not pose a risk to the public and has no prior convictions for contempt. 6. As earlier stated, the first defendant accepts that he has not complied with the Orders and, in fact, he refuses to comply with the Orders. Contrarily, the second defendant's evidence is that she has not been able to comply with the Orders because she has no knowledge of the properties' location and, even if she did, is not licensed to drive and deliver the property to the plaintiff. 7. To this date, the defendants have not surrendered their possession of the property or paid the sum of $572,442.96 to the plaintiff, and the failure to do this, it is alleged, constitutes a contempt of court. 8. The plaintiff submits that the defendants be convicted and made liable to such punishment as the Court considers appropriate. Facts and Chronology 1. There are a number of judgments of this Court which set out the protracted history of this dispute: Paccar Financial Pty Ltd v Menzies; Menzies v Paccar Financial Pty Ltd (No 5) [2013] NSWSC 772; Menzies v Paccar Financial Pty Ltd [2013] NSWSC 283. It is necessary to reiterate some of the detail of the history of the dispute in these reasons for judgment. 2. The first and second defendant were directors of Menzies Haulage Pty Ltd (Menzies Haulage), a truck company engaged in general and freight cartage work. In 2006, Menzies Haulage entered into four deeds of loan and charge arrangements with Paccar Financial to purchase two trucks and two trailers for a total sum of $570,000. The first and second defendants were liable as guarantors and indemnified Paccar Financial in respect to the four loan agreements. 3. Not long after the execution of the loan agreements, Menzies Haulage fell into arrears with their repayments to Paccar Financial. This situation occurred regularly thereafter. 4. Regrettably in 2008, the first defendant suffered an injury at work that he says was a contributing factor to the company's overall financial trouble. Consequently, Menzies Haulage defaulted on its loan obligations and failed to make their loan repayments in accordance with the loan agreements. 5. In January 2009, Menzies Haulage went into voluntary liquidation, and in March 2009, Paccar Financial terminated the four deeds of loan and charge, sued for possession of the property and demanded payment of monies owed under the guarantor and indemnity loan agreement. 6. In September 2009, the Federal Court ordered that the company be wound up and the liquidator divest itself of any interest in the property. 7. As mentioned above, the plaintiff brought proceedings against the first and second defendants seeking a judgment for possession and monetary orders. On 13 June 2013, Harrison AsJ made the following orders: "The court orders in proceedings 2010/377702 that: (1) Paccar is entitled to possession of the following property: (a) 1 x 2004 Vawdrey D Double Tautliner Trailer Chassis No XXXXX Registration XXXXX and 1 x 2004 Vawdrey B Double Tautliner Trailer Chassis No XXXXX Registration XXXXX (as set out in Loan Contract 7470-20393); (b) 1 x 2003 Kenworth K104 Prime Mover Chassis No XXXXX Engine No XXXXX Registration XXXXX (as set out in Loan Contract 7470-20394); (c) 1 x 2001 Barker B Double Trailer Chassis XXXXX Registration XXXXX and 1 x 2001 Barker B Double Trailer Chassis XXXXX Registration XXXXX (as set out in Loan Contract 7470-20395); and (d) 1 x 2003 Kenworth K104 Prime Mover Chassis XXXXX Engine XXXXX Registration XXXXX (as set out in Loan Contract 7470-20396). (2) Ian Menzies and Colleen Menzies are to deliver the property referred to in order (1) to Paccar within 14 days. (3) The defendants are to pay the plaintiff the sum of $572,442.96. (4) The cross claim is dismissed. (5) The defendants are to pay the plaintiff's costs on an indemnity basis." 1. On 20 June 2013, Andrew Brown, a partner at Mills Oakley Lawyers representing the plaintiff, sent a letter addressed to the first and second defendants, enclosing an authenticated judgment of the Court informing them that the property must be delivered within 14 days. 2. On 25 June 2013, the matter came before me in the duty list, and I granted a limited interim stay of Orders 3 and 5 until 21 September 2013 on the basis of an appeal that had been instituted. Also, because of the nature of the case, I referred the matter to the Registrar for the purpose of the first and second defendant obtaining pro bono legal advice and being provided legal assistance for their appeal. 3. On 15 July 2013, by consent, Orders 1 and 2 were stayed until 26 August 2013. As a consequence, the defendants sought a final stay of the Orders and filed a Notice to Appeal to the Court of Appeal on 21 June 2013 against the decision of the primary judge (Harrison AsJ). 4. The Court of Appeal, constituted by Leeming JA, heard an interlocutory application for further stay and issued the following orders: extension of the existing stays of Orders 1, 2, 3 and 5 made on 13 June 2014; a stay of Orders 3 and 5 until 28 days after the determination of the appeal; and required Paccar to give the Court an undertaking that upon delivery of equipment, it would keep and store the equipment exercising care, upon which undertaking, Orders 1 and 2 may be enforced on or after 24 September 2013. 5. On 5 August 2014, the Court of Appeal (Emmett JA, Leeming JA and Sackville AJA agreeing) dismissed the appeal with costs. 6. On 7 August 2014, the plaintiff's solicitor wrote a letter to the first and second defendants stating: "We confirm that the Court of Appeal on 5 August 2014 dismissed your appeals of the decision of Harrison AsJ including the substantive decision on 13 June 2013 in which judgment was given in favour of our client (Harrison AsJ judgment). Following the delivery of the Harrison AsJ Judgment we served upon you the Orders of the Court which contained a Penal Notice as required by the Rule of Court. You have acknowledged receipt of that document by provided a copy within the appeal papers as well as making complaint to the Court and to third parties that such a Penal Notice had been included with the Orders. A further copy is attached. You previously obtained a stay of the payment of monies as ordered by Harrison AsJ which stay was effective pending the hearing and determination of the appeal. That stay is no longer in place. A stay of the judgment for the delivery up of the equipment was dismissed by Justice Leeming in advance of the hearing of the appeal. Notwithstanding that our client provided an undertaking to hold the equipment pending the hearing of the appeal you have refused to comply with the order of the Court. We did not seek to prosecute your failure to deliver up the equipment so as to not interfere with or delay the hearing of the appeal. You have threatened to make application to the High Court of Australia for special leave to appeal from the decision of the Court of Appeal. That is of course your right to do so however the making of an application itself does not constitute a stay of the judgment of the New South Wales Supreme Court. Accordingly we repeat our request that you delivery up the equipment as identified in the attached Order of the Supreme Court of New South Wales. If you do not within 7 days of the date of this letter deliver up possession of the following property or contact our office to make arrangements for their collection we are instructed to commence action to compel delivery up, including contempt of court proceedings." 1. As can be seen from above, the plaintiff has written to both the first and second defendants since 20 June 2013, requesting that the defendants make arrangements for the physical or constructive delivery of the property. The first and second defendants have declined, or refused, to accept the plaintiff's proposals and the property still remains in the possession of the defendants or their agents. Contempt of Court - Relevant Principles 1. Historically, the court has drawn a distinction between civil and criminal contempt proceedings. 2. The purpose and distinction of contempt was discussed in the judgment of the High Court in Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 161 CLR 98, where Gibbs CJ, Mason, Wilson and Deane JJ said: "[106] Punishment for contempt serves two functions: (a) enforcement of the process and orders of the court, disobedience to which has been described as 'civil contempt'; and (b) punishment of other acts which impede the administration of justice, such as obstructing proceedings in court while it is sitting or publishing comments on a pending case, which have both been described as 'criminal contempt' (Fox: The History of Contempt of Court (1927), at p 1). [107] …The principal theoretical basis of the distinction is that disobedience to the process and orders of the court in civil proceedings is said to be a civil wrong, a matter between party and party, enforcement being for the private benefit or interest of the party seeking enforcement, whereas impeding the administration of justice is a public wrong. A secondary basis for the distinction is that the main purpose of sanctions for disobedience in civil proceedings is coercive rather than punitive." 1. The distinction is now considered to be unsatisfactory in nature, in part because the line cannot always be sharply drawn: see Windeyer J in Australian Consolidated Press Ltd v Morgan (1965) 112 CLR 483. For example, the conduct may be characterised as both civil and criminal conduct, if the disobedience of a court order were contumacious, as per Beazley JA in Pang v Bydand Holdings Pty Ltd [2011] NSWCA 69. 2. Not every breach of an order of the court is considered to be contempt. Where a breach of an order is alleged, the court must be satisfied that the contempt is wilful or deliberate and not merely causal, accidental or unintentional disobedience: Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd at [112]-[113]. 3. It is unnecessary for a party alleging contempt to prove that the contemnor had a specific intent or awareness of disobeying the courts order: Anderson v Hassett [2007] NSWSC 1310; Wyszenko v Wyszenko [2012] NSWSC 732. However, it is necessary to establish whether the breach of the order was deliberate and voluntary: Advan Investments Pty Limited v Dean Gleeson Motor Sales Pty Ltd [2003] VSC 201. 4. The standard of proof for the allegation of contempt is beyond reasonable doubt since it is essentially considered criminal in nature: Witham v Holloway [1995] HCA 3; (1995) 183 CLR 525; Commonwealth Bank of Australia v Salvato (No 4) [2013] NSWSC 321; Talacko v Talacko [2009] VSC 387. 5. In National Bank (NAB) Ltd v Juric [2001] VSC 375, Gillard J held that the elements to be satisfied to establish whether a party is guilty of civil contempt due to a breach of an order of the court include: the orders were made by a court; the terms of the order were clear, unambiguous and capable of compliance; the order was served on the alleged contemnor or excused in the circumstances or service dispensed with, pursuant to the Rules of the Court; the contemnor had knowledge of the terms of the order; and the contemnor breached the orders deliberately and voluntarily. These principles have been adopted in New South Wales: see Wyszenko v Wyszenko [2012] NSWSC 732. 6. Similarly, Finn J applied the principles in Metcash Trading Ltd v Bunn (No 5) [2009] FCA 16, although with a different emphasis. Finn J's approach was followed by Barrett J in Australian Securities and Investments Commission v Matthews [2009] NSWSC 77; (2009) 69 ACSR 559, and is expressed as follows: "[9] First, the order alleged to be breached must be clear and unambiguous: see Australian Consolidated Press Ltd v Morgan (1965) 112 CLR 483 at 515–516; and be capable of being complied with: see Australian Prudential Regulation Authority v Siminton (No 7) [2007] FCA 1609 at [40]. Secondly, the proper construction of an order is not a matter of fact but a question of law: Universal Music Australia Pty Ltd v Sharman Networks Ltd (2006) 150 FCR 110 at [19]. Thirdly, it is not necessary for an applicant to prove that an alleged contemnor intended to disobey the order: ibid, at [17]; nor is it necessary to prove that the alleged contemnor understood the true meaning of the terms of an order or that he or she was aware that his or her conduct constituted a breach of the order: Microsoft Corporation v Marks (No 1) (1996) 69 FCR 117 at 143. Nonetheless it may be highly relevant to the question of penalty that the alleged contemnor disobeyed an order because he or she placed a construction on it that was not its true construction: Universal Music Australia Pty Ltd at [38]. Fourthly, deliberate conduct which is in breach of a court order will constitute wilful disobedience of the order, and therefore a civil contempt, unless the conduct be casual, accidental or unintentional: Louis Vuitton Malletier SA v Design Elegance Pty Ltd (2006) 149 FCR 494 at [6]. Fifthly, the facts in issue in a contempt charge must be proved beyond reasonable doubt: Witham v Holloway (1995) 183 CLR 525 at 534." 1. As earlier stated in these reasons, the Orders of the Court were made on 13 June 2013, instructing the defendants to surrender their possession of the property and pay the judgment sum to the plaintiff. The stay of the orders expired on 24 September 2014. Therefore, the order requiring the first and second defendant to deliver the property to the plaintiff has been in force from, at least, 24 September 2013. To this date, the first and second defendants have not complied with that order, or any order at all, in relation to the primary judge's substantive judgment. 2. There is no factual dispute that the first and second defendants were served with the Orders and Penal Notice on numerous occasions and had knowledge of the Orders. 3. The first defendant, on many occasions, has expressed that he will not surrender the property to the plaintiff for reasons he considers appropriate. 4. Emails tendered into evidence, as well as his attitude expressed to the Court (which I have discussed below), reveal that the first defendant's evasive acts have been for the sole purpose of preventing or hindering the plaintiff's enforcement of the Orders: "(13) … As I have said from the outset, until there is a fair and just trial of the matter the trucks will not be surrendered unless it is over my cold dead lifeless body." (Ian Menzies submission of 28 August 2013). … (26) The false biased Judgment of Harrison ASJ should be struck out immediately. It is a reflection of what Courts may be expected to do in a Despotic Regime. Menzies can't use the trucks because Paccar have been sending agents to Our property and previous properties following us. The trucks are in storage and will stay there, until every Appeal Process is exhausted." (First Defendant, Court of Appeal submissions, dated 25 August 2013). 1. This material is not used as evidence of contumelious disregard of the Orders, as the Orders were not in force at the relevant time, but instead the material evidences the removal of the property by the first defendant into a storage facility. 2. Further, in email correspondence with the Court, the first defendant states: "I again advise until there is a Trial of the facts, utilising all evidence with all witnesses questioned and present with all Appeal Processes exhausted the trucks will remain in secure storage – I assure the World of that. If any other scenario is forced upon me, I will without fail die for my cause because to do else is to submit to impositions of a Court that has lost all notion of Justice the Law and is without fail in the pockets of the Corporations…" (Email to the Court on 29 July 2014) … "To say we have to pay $572,000 for the trucks but we have to also give the Trucks to Paccar can only mean one thing that Court and its Judges are in the control of the likes of Paccar. I will resist that unjust Order until my last breath. … I take this opportunity to advise Paccar and the Court that my wife has only ever obediently And under duress been involved in this Court case or signed anything in regard to the trucks And does not know where they are or has any control over anything in their regard." (Email to Registrar Riznyczok, Court of Appeal, on 29 September 2013) 1. In my opinion, the above correspondence and his apology letter clearly show that the first defendant is well aware of the Orders. Furthermore, his apology letter discloses an understanding that he knew his conduct was wrong. This adds to the seriousness of the contravention. 2. The second defendant admits that she is aware of the terms of the orders and the effect of them and her evidence is that she has not asked the first defendant for the location of the trucks. 3. The plaintiff asserts that it is open to the Court for an inference to be made, in these circumstances, that the second defendant's omission or conduct amounts to shutting her eyes wilfully and demonstrates that she has adopted the position of the first defendant by failing to take any steps to deliver the property to the plaintiff. The second defendant has taken no step or steps to ascertain the trucks' location or comply with the Orders. 4. I find that the first and second defendants are deliberately attempting to render the Orders of the Court unenforceable. 5. I have no doubt that the first and second defendants understood the Orders and knew that they were required to obey them. In my view, the terms of the order are clear, unambiguous and capable of compliance by the first and second defendants. Further, it is apparent from the above correspondence, that the first and second defendants do not intend to surrender the property to the plaintiff and this refusal is deliberate. By refusing to comply, the first and second defendants are deliberately and contumeliously impeding the administration of justice. 6. For the reasons I have given, I am satisfied that the charge of contempt against the first and second defendant is proven beyond reasonable doubt. Conclusion 1. I make the following orders: 1. Ian Menzies, is guilty of contempt of this Court, in that in breach of the Order made and entered by this Court on 13 June 2013 whereby Ian Menzies and Colleen Menzies were ordered to deliver the property referred to in order (1) to Paccar Financial Pty Ltd within fourteen days, Ian Menzies failed to deliver the property referred to in order (1) to Paccar Financial Pty Ltd within 14 days or at all; 2. Colleen Menzies, is guilty of contempt of this Court, in that in breach of the Order made and entered by this Court on 13 June 2013 whereby Ian Menzies and Colleen Menzies were ordered to deliver the property referred to in order (1) to Paccar Financial Pty Ltd within fourteen days, Colleen Menzies failed to deliver the property referred to in order (1) to Paccar Financial Pty Ltd within 14 days or at all. 1. I will reserve to hear the parties submissions on punishment, sentence and costs. ********** 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. Decision last updated: 04 May 2015