Supreme Court New South Wales Medium Neutral Citation: Srotyr & Ors v Clissold & Anor [2015] NSWSC 1770 Hearing dates: 19 November 2015 Decision date: 27 November 2015 Jurisdiction: Equity - Duty List Before: White J Decision: Refer to paras [28] and [29] of judgment. Catchwords: CONTEMPT OF COURT – application for punishment for contempt of Court – construction of undertakings – undertakings noted by the Court but not expressed to be made either to the Court or inter partes – relevance of the Judge's asking the party's solicitor whether the undertakings were given – undertakings prevented defendant from dealing with certain funds, subject to exceptions – where undertakings were implicitly given on an interlocutory basis until further order, but no cross-undertaking as to damages was given – held, dismissing the application, that the undertakings were made inter partes and not to the Court PRACTICE AND PROCEDURE – costs – variation of costs orders – plaintiff seeks variation of earlier costs order made by consent – where defendant breached undertakings given inter partes – where plaintiff knew that those undertakings may have been breached at the time that the costs order was made – held, dismissing the application, and assuming, without deciding, that the Court has power to vary such a costs order, that it would not be appropriate on these facts to vary the costs order Legislation Cited: Civil Procedure Act 2005 (NSW) Trade Practices Act 1974 (Cth) Cases Cited: Australian Consolidated Press Limited v Morgan (1965) 112 CLR 483 Cain v Glass (No. 1) (Supreme Court of New South Wales, Court of Appeal, 3 October 1985, unreported, BC8511322) George v Webb [2011] NSWSC 1608 Heperu Pty Ltd v Belle [2011] NSWSC 1151 at [25] Housewives United Buyers Co-operative Limited v Trustees of the Sisters of St Joseph (1980) 42 FLR 106 Kirkpatrick v Kotis [2004] NSWSC 1265; (2004) 62 NSWLR 567 Ross v Lane Cove Council [2014] NSWCA 50; (2014) 86 NSWLR 34 Short v Crawley (No 42) [2009] NSWSC 1110 Wyszynski v Bill [2005] NSWSC 110 Category: Procedural and other rulings Parties: John Srotyr (1st Plaintiff) Marion Enid Srotyr (2nd Plaintiff) Srotyr & Co Pty Limited (3rd Plaintiff) Keith Barry Clissold (1st Defendant) Metropolitan Taxation Services (Bankstown) Pty Ltd (2nd Defendant) Representation: Counsel: A Cornish (Plaintiffs) S J Burchett (1st Defendant) Solicitors: Esplins Solicitors (Plaintiffs) Goodwyn Legal (1st Defendant) File Number(s): 2014/325841 Judgment 1. HIS HONOUR: On 5 November 2014 the plaintiff, Mr John Srotyr, commenced proceedings against the first defendant, Mr Keith Clissold, and the second defendant, Mrs Marion Srotyr, seeking amongst other relief, orders that Mr Clissold be removed as Mrs Srotyr's attorney, that he provide accounts in relation to her financial affairs and that he be restrained until further order from disposing, dealing with or diminishing the value of any assets held in the name of or for the benefit of Mrs Srotyr unless such amount was for the direct payment of an expense incurred for her accommodation or medical care, and from disposing, dealing with or diminishing the value of any assets held in the name of or for the benefit of Srotyr & Co Pty Ltd. 2. On 5 November 2014 Mr Srotyr obtained orders for short service of the summons that was directed to be returnable before the Duty Judge on 6 November 2014. 3. On 6 November 2014 Slattery J made orders by consent that within 21 days Mr Clissold provide certain information that had been requested by or on behalf of the plaintiff and that the matter be relisted before the Registrar on 4 December 2014. His Honour also made an order as follows: "4. The Court notes the undertaking of the first defendant:- (a) Not to dispose of deal with or diminish the value of any assets held in the name of or for the benefit of the second defendant unless such amount is for the direct payment of an expense incurred for the second defendant relating to the second defendant's accommodation or medical care; (b) Not to dispose of deal with or diminish the value of any assets held in the name of or for the benefit of [Srotyr] & Co Pty Limited or if such assets have been sold then the net proceeds of sale save for the withdrawal of monies for the payment of any expense relating to the second defendant's accommodation or medical care and running costs of the property known as [xxx]/1 Park Lane Towers, Woolloomooloo; (c) Not to dispose of the property known as [xxx]/1 Park Lane Towers, Woolloomooloo." 1. On 23 July 2015 Ball J ordered that Mrs Srotyr become the second plaintiff rather than the second defendant, and that her son Mr Srotyr be appointed as her tutor. Orders were made by consent for Mr Clissold to furnish accounts in respect of transactions entered into as attorney for Mrs Srotyr and to produce certain records. Orders were made by consent for Mr Clissold to be removed from office as Mrs Srotyr's enduring attorney. Orders made by Ball J by consent on 23 July 2015 also included that the defendant (Mr Clissold) pay the first plaintiff's (Mr Srotyr's) costs of the proceedings up to and including 9 July 2015. 2. On 30 October 2015 the plaintiffs, now Mr Srotyr, Mrs Srotyr, and Srotyr & Co Pty Ltd, filed two notices of motion. The first sought the following declaration and order: "1. A declaration that the first defendant is guilty of contempt of Court in that on or about 18 March 2015 the first defendant without justification breached undertakings given to the court on 6 November 2014: (a) 'not to dispose of deal with or diminish the value of any assets held in the name of or for the benefit of Srotyr & Co Pty Ltd or if such assets have been sold then the net proceeds of sale save for the withdrawal of monies for the payment of any expense relating to the second defendant's accommodation or medical care and running costs of the property known as [xxx]/1 Park Lane Towers Woolloomooloo'; and (b) 'not to dispose of, deal with or diminish the value of any assets held in the name of or for the benefit of the second defendant [Marion Srotyr] unless such amount is for the direct payment of an expense incurred for the second defendant relating to the second defendant's accommodation or medical care' 2. An order that the first defendant be punished or otherwise dealt with for his contempt of court." 1. The statement of charge asserted: "1 On 6 November 2014, the first defendant, through his solicitor, gave an undertaking to this court: (a) 'not to dispose of deal with or diminish the value of any assets held in the name of or for the benefit of Srotyr & Co Pty Ltd or if such assets have been sold then the net proceeds of sale save for the withdrawal of monies for the payment of any expense relating to the second defendant's accommodation or medical care and running costs of the property known as [xxx]/1 Park Lane Towers [Woolloomooloo]' (Undertaking); and 2 On or before 18 March 2015, without justification and without either agreement from the plaintiffs (or any of them) or an order of this court, the first defendant caused or permitted funds belonging to Srotyr & Co Pty Ltd to be paid to: (a) the first defendant, Keith Barry Clissold, in the sum of $27,000.00, purportedly in payment of purported fees for the provision of power of attorney services by Keith Barry Clissold for the 2014 year; and (b) H G Mayer & Co, in the sum of $2,650.00, purportedly in payment of accounting and taxation services in respect of the 2014 year." 1. The second notice of motion filed by the plaintiffs on 30 October 2015 sought the following relief: "1 An order vacating order 5 made by this Court by consent on 23 July 2015. 2 An order that the first defendant pay the first plaintiff's costs of the proceedings up to and including 9 July 2015 on the indemnity basis. 3 An order that the first defendant repay to the third plaintiff the sums of: (a) $2,650.00; and (b) $27,000.00. 4 An order that the first defendant pay interest to the third plaintiff in respect of the Sums in relation to the period from 18 March 2015 to the date of repayment at the rate/s applicable under s. 100 of the Civil Procedure Act 2005 over that period. 5 Costs of this motion on the indemnity basis." 1. On 11 November 2015 the proceeding was referred to me in the Duty List by the Registrar on Mr Clissold's application for summary dismissal of the first notice of motion for contempt. I declined to deal with the application for summary dismissal, but listed both notices of motion for hearing on 19 November 2015. This judgment deals with those notices of motion. 2. The applications are within a small compass. There is no dispute that on 18 March 2015, Mr Clissold caused payments to be made from an account of Srotyr & Co Pty Limited to him in the sums of $27,000 and $2,650. The payments were made in respect of two invoices. One was an invoice dated 12 March 2015 rendered by him addressed to Mrs Srotyr, care of himself (he then being Mrs Srotyr's attorney) for $27,000 for "Power of attorney fees for year ended 30th June 2014 As calculated as per scale of 50% of Public Trustee scales As agreed to by Keith, Miloslav & Enid in 2008". The other was for an invoice issued by HG Mayer & Co addressed to the secretary of Srotyr & Co Pty Ltd for $2,650 for: "Preparation and writing up books of account and extracting therefrom Balance Sheet and Profit and Loss Account for year ended 30 June 2014 including company tax return and all secretarial services, conferences and attendances in connection thereto. Preparation of Income Tax Returns for the year ended 30 June 2014". Payment of both invoices was made from a bank account in the name of Srotyr & Co Pty Ltd on 18 March 2015. At that time Mr Clissold was the sole director of Srotyr & Co Pty Ltd. HG Mayer & Co is Mr Clissold's accountancy business. 1. On 16 November 2015 $29,650 was repaid by Mr Clissold. Through his counsel Mr Clissold gave an undertaking to the Court also to repay the interest that would have been earned on the amount of $29,650 had that amount not been withdrawn from the account of Srotyr & Co Pty Ltd. He undertook to do so forthwith once he is informed of the rates of interest that have been earned on the moneys in that company's account. 2. The first issue is whether the undertaking given by Mr Clissold through his solicitor, Mr Kevin Yau, on 6 November 2014 was an undertaking given to the Court or to the plaintiff. The transcript records the following. Mr van Ede appeared for Mr Srotyr. Mr Yau appeared for Mr Clissold: "VAN EDE: I have handed up consent orders. HIS HONOUR: The matter is fully resolved on an interlocutory basis? VAN EDE: Yes. HIS HONOUR: These orders are made by consent? VAN EDE: That is correct. YAU: That is correct. HIS HONOUR: What is the number? VAN EDE: 21 days. HIS HONOUR: Do you give the undertaking on behalf of the first defendant which is set out in para four? YAU: Yes. HIS HONOUR: 4 (a) (b) and (c). I congratulate the parties in being able to resolve the matter on an introductory [scil. interlocutory] basis. I will make orders in accordance with the short minutes, initialled by me, dated today's date and placed with the Court papers. I make orders one, two, three. I note the undertaking given by the first defendant which is set out in paras (a) (b) and (c) and I make the orders set out in para five of the orders. I grant the number [sic] set out in para six and the annexures will be scanned and added to the orders." 1. The undertaking proffered did not state whether it was an undertaking proffered to the plaintiff or to the Court. Unless the undertaking was proffered to the Court it could not be the basis for a charge of contempt. 2. It was common ground that the undertaking was not given on a final basis. I accept the plaintiff's submission that it was impliedly given until further order, rather than, as counsel for Mr Clissold submitted, until the matter next came before the Court. But the ambiguity as to the temporal limitation to the undertaking, whilst relevant to whether it could sustain a charge of contempt does not answer the question: to whom was the undertaking given? The plaintiff contends that that question should be answered "to the Court" because Slattery J asked: "Do you give the undertaking on behalf of the first defendant …?", and the defendant's solicitor said "Yes". 3. The undertaking resolved Mr Srotyr's claim for an interlocutory injunction. That does not imply that the undertaking was given to the Court. There is no reason that a plaintiff cannot accept an agreement or undertaking inter partes in lieu of an interlocutory injunction. If the undertaking were given to the Court it would have been in substitution for an interlocutory injunction. Except in exceptional circumstances which are not present in this case, an interlocutory injunction is only given on the provision by the plaintiff of an undertaking as to damages. There was no cross-undertaking as to damages. 4. The Court frequently is asked to note an agreement between the parties or an undertaking by one party to another. The purpose of the Court's being asked to note such an agreement or undertaking is presumably to seek to avoid any issue that might otherwise later arise as to whether the agreement had in fact been made or the undertaking had in fact been given. That may be superfluous because the agreement or undertaking can be recorded by means other than the Court's notation. But it is a common practice, notwithstanding what was said in Cain v Glass (No. 1) (Supreme Court of New South Wales, Court of Appeal, 3 October 1985, unreported BC 8511322 at 4-5). One potentially material consequence of the Court's noting an undertaking inter partes in satisfaction of a claim for interlocutory relief is that if the undertaking is not complied with the plaintiff may have strong grounds for obtaining an interlocutory injunction in terms of the undertaking on giving the usual undertaking as to damages. 5. The plaintiff relied upon the decision of J B Sweeney J in Housewives United Buyers Co-operative Limited v Trustees of the Sisters of St Joseph (1980) 42 FLR 106 at 108. There, the applicant in the Federal Court had alleged a breach of ss 45 and 46 of the Trade Practices Act 1974 (Cth) to restrain the respondents from carrying out the terms of a contract. There was a final settlement of the proceedings on the basis of an undertaking given by the respondents. In accepting the terms of the settlement the judge asked the solicitor for the respondents whether he gave the undertaking set out in the terms of settlement and received an assurance that the undertakings were given. Proceedings were later brought for contempt for alleged breach of the undertakings. J B Sweeney J held that the undertakings had been given to the Court and were not merely undertakings inter partes. In reaching that conclusion his Honour relied in part upon the decision in Australian Consolidated Press Limited v Morgan (1965) 112 CLR 483. His Honour also said (at 108): "So in this case the undertaking is something more than a bargain inter partes. Had it been no more than that and his Honour having read it when the terms were handed up to him, there would seem no purpose in him asking the solicitor for the trustees if he gave on behalf of his clients the undertakings set out in the terms of settlement, and indeed there would seem no point in the solicitor then doing so." 1. I do not doubt the correctness of that factual finding in the circumstances of Housewives United Buyers Co-operative Limited v Trustees of the Sisters of St Joseph. The undertaking was given in that case to resolve an applicant's claim for final injunctive relief where there would be no avenue for the applicant to seek further or different relief in the proceeding if the undertaking were not complied with, except by proceedings for contempt. The significant issue of the absence of a cross-undertaking as to damages that arises in this case did not arise there. 2. But although the case is distinguishable, the paragraph quoted at para [16] above does support the plaintiff's submission that in this case the undertaking should be construed as one given to the Court. Nonetheless, in the circumstances of the present case, I do not consider that the fact that the judge asked the solicitor of the party giving the undertaking whether he gave it, indicates that the undertaking was given to the Court rather than to the plaintiff. Where short minutes are handed up which expressly provide for undertakings to be given to the Court it is customary for a judge to ask whether the undertakings are given. It can be said that such a query is unnecessary because the undertakings are expressly given in the document that is proffered. In my view, the judge's inquiry and Mr Yau's response are only a slight indication that the undertaking should be treated as having been given to the Court. They are consistent with the undertaking being given to the plaintiff. More significant is the absence of a cross-undertaking as to damages. 3. In Housewives United Buyers Co-operative Limited v Trustees of the Sisters of St Joseph J B Sweeney J observed that in Australian Consolidated Press Limited v Morgan the charge of contempt was based upon an undertaking that did not expressly state that it was given to the Court, but which was nonetheless treated as having been given to the Court. However, the circumstances of that case are clearly distinguishable. There an undertaking had been given in the District Court that the defendant would not publish any Gallup Poll results in respect of which the plaintiffs had copyright. Following a general election the defendant published material that was said to be in breach of the undertaking. Proceedings were commenced in the Supreme Court for an injunction to restrain the defendant from publishing in any form whatsoever any Gallup Poll results in which the plaintiffs had copyright. The plaintiffs' originating summons was stood over on a further undertaking being given by the defendant that he would not publish in any form whatsoever any Gallup Poll results in respect of which the plaintiffs or either of them had the copyright. It appears to have been common ground in the High Court that the undertaking given to the Supreme Court which the defendant was claimed to have breached was an undertaking given to the Court and not merely inter partes. That it was common ground is understandable. It would have been hard for the defendant (appellant in the High Court) to contend that it had satisfied the plaintiffs' claim for an injunction in the Supreme Court merely by repeating an undertaking it had already given that it had allegedly breached. In my view, nothing in Australian Consolidated Press Limited v Morgan assists in deciding whether the undertaking given on 6 November 2014 to Slattery J was an undertaking given to the Court or to the plaintiff. 4. Because the undertaking was clearly, although not expressly, given on an interlocutory basis, and because no cross-undertaking as to damages was proffered, I do not construe the undertaking as having been given to the Court. Slattery J's question to Mr Yau, solicitor for the defendant, as to whether he gave the undertaking on behalf of the defendant, and Mr Yau's response were consistent with the undertaking being given to the plaintiff. 5. Whilst it is clear from Australian Consolidated Press Limited v Morgan and Housewives United Buyers Co-operative Limited v Trustees of the Sisters of St Joseph that undertakings that are not expressly made to the Court may nonetheless be found to have been made to the Court, nonetheless, in my view, if it is intended that the sanctions for a contempt of court should attach to the breach of an undertaking, it should be clear that the undertaking is given to the Court. Any reasonable doubt on that question should be resolved against the party seeking to enforce the undertaking by invoking the sanctions available for a contempt of court. I think this is consistent with the principle that an order or undertaking should be clear if breach of it is to sound in contempt proceedings (Ross v Lane Cove Council [2014] NSWCA 50; (2014) 86 NSWLR 34 at [29]). (It is unnecessary to examine the nuances of the effect of ambiguity of an order on proceedings for contempt (cf Kirkpatrick v Kotis [2004] NSWSC 1265; (2004) 62 NSWLR 567 at [55]-[60]; Wyszynski v Bill [2005] NSWSC 110 at [30]-[36]).) 6. For these reasons the first notice of motion charging with Mr Clissold with contempt of court should be dismissed. 7. The relief sought in paragraph 3 of the second notice of motion filed on 30 October 2015 has been obtained by Mr Clissold's having repaid the two sums in question. Mr Clissold does not admit that he was required to make the repayment. That is relevant to questions of costs. 8. In my view, it is clear that Mr Clissold was required to make the repayment. The question of whether he was entitled to charge Mrs Srotyr for work done as her attorney is a principal issue on the claim for final relief. It is not necessary for me to express an opinion on that question. It is clear the payments of $27,000 and $2,650 were not made for the payment of any expense relating to or incurred for Mrs Srotyr's accommodation, or medical care, or for the running costs of the property at Park Lane Towers, Woolloomooloo. They were in payment of Mr Clissold's charges. Accordingly, the payments that Mr Clissold caused to be made from the account of Srotyr & Co Pty Ltd were in breach of the undertaking he gave on 6 November 2014. 9. Save for the question of interest, Mr Clissold has remedied that breach by repaying the moneys to the company's account. He has undertaken to the Court to pay the interest that would have been earned had the withdrawals not been made. Mr Srotyr claims interest at the rates applicable under s 100 of the Civil Procedure Act 2005 (NSW) which can be assumed to be higher than the rates of interest that would have been earned had the moneys not been withdrawn. Section 100(1) provides: "100 Interest up to judgment (cf Act No 52 1970, section 94; Act No 9 1973, section 83A; Act No 11 1970, section 39A) (1) In proceedings for the recovery of money (including any debt or damages or the value of any goods), the court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the court thinks fit: (a) on the whole or any part of the money, and (b) for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect." 1. Whilst the plaintiffs' final claim against Mr Clissold is for the recovery of money, Mr Srotyr's claim by his notice of motion is not a claim for the recovery of money within the meaning of s 100(1) of the Civil Procedure Act. It is an interim claim for restoration of money to the account of the company (cp Heperu Pty Ltd v Belle [2011] NSWSC 1151 at [25]; George v Webb [2011] NSWSC 1608 where final orders for restoration of a fund included orders for payment of interest under s 100). The restoration of the money that ought not to have been withdrawn does not resolve the question of whether Mr Clissold is entitled to be paid the sums he withdrew from that account pursuant to his invoices. In my view, interest could not be ordered at the rates prescribed for the purposes of s 100(1) of the Civil Procedure Act unless it were decided that Mr Clissold had not been entitled to be paid for the invoices pursuant to which moneys were transferred from the company's account. That is an issue for final hearing. 2. The remaining question concerns the costs orders made on 23 July 2015. These are the subject of prayers 1 and 2 in the second notice of motion. The costs orders were made by consent. At the time the costs orders were made Mr Srotyr knew that Mr Clissold had rendered invoices for the two sums of $27,000 and $2,650 and apprehended that those invoices might have been paid. He did not positively know that the invoices had been paid, but he knew they might have been. Mr Clissold did not dispute that there was power to vary the costs order made on 23 July 2015. I assume, without deciding, that that is so. The costs order made on 23 July 2015 was made by consent and as part of an agreement for the resolution of various claims. Whilst the Court has power to vary interlocutory orders made by consent, even though such orders embody a contract between the parties (Short v Crawley (No 42) [2009] NSWSC 1110 at [47]-[61] and cases there cited), it would not be appropriate to exercise that power in this case where the plaintiff knew of the possibility that there had been a breach of the undertaking given on 6 November 2015 and agreed to the orders, notwithstanding that possibility. In any event, the breach of the undertaking of 6 November 2014 was remote from the actual conduct of the proceedings in respect of which the costs order was agreed to. 3. For these reasons I order that the plaintiffs' notice of motion filed on 30 October 2015 seeking a declaration that the first defendant is guilty of a contempt of court be dismissed. 4. In respect of the second notice of motion filed on 30 October 2015 I make the following orders: 1. Note the undertaking of the first defendant to the Court that upon being informed of the rates of interest earned by moneys in the account of Srotyr & Co Pty Ltd from which the sums of $2,650 and $27,000 were withdrawn, the first defendant will forthwith pay to the third plaintiff the interest that would have been earned on the sums of $2,650 and $27,000 withdrawn on 18 March 2015 but for their withdrawal. 2. Note that on 16 November 2015 the first defendant repaid to the third plaintiff the sums of $2,650 and $27,000 the subject of order 3 of the notice of motion. 3. Order that the notice of motion filed on 30 October 2015 be otherwise dismissed. 1. I will hear the parties on 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: 27 November 2015