Paccar Financial Pty Limited v Ian Menzies & Colleen Menzies

1. [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. [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. [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:

4. [4]

   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.

5. [5]

   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.

6. [6]

   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).

7. [7]

   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.

8. [8]

   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.

9. [9]

   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.

10. [10]

    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.

11. [11]

    The plaintiff submits that the defendants be convicted and made liable to such punishment as the Court considers appropriate.

12. [12]

    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.

13. [13]

    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.

14. [14]

    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.

15. [15]

    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.

16. [16]

    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.

17. [17]

    In September 2009, the Federal Court ordered that the company be wound up and the liquidator divest itself of any interest in the property.

18. [18]

    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:

19. [19]

    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.

20. [20]

    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.

21. [21]

    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).

22. [22]

    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.

23. [23]

    On 5 August 2014, the Court of Appeal (Emmett JA, Leeming JA and Sackville AJA agreeing) dismissed the appeal with costs.

24. [24]

    On 7 August 2014, the plaintiff’s solicitor wrote a letter to the first and second defendants stating:

25. [25]

    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. [26]

   Historically, the court has drawn a distinction between civil and criminal contempt proceedings.

2. [27]

   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:

3. [28]

   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.

4. [29]

   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].

5. [30]

   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.

6. [31]

   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.

7. [32]

   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.

8. [33]

   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. [34]

   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.

10. [35]

    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.

11. [36]

    The first defendant, on many occasions, has expressed that he will not surrender the property to the plaintiff for reasons he considers appropriate.

12. [37]

    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. [38]

    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.

14. [39]

    Further, in email correspondence with the Court, the first defendant states:

15. [40]

    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.

16. [41]

    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.

17. [42]

    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.

18. [43]

    I find that the first and second defendants are deliberately attempting to render the Orders of the Court unenforceable.

19. [44]

    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.

20. [45]

    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. [46]

   I make the following orders:

   1. (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. (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.

2. [47]

   I will reserve to hear the parties submissions on punishment, sentence and costs.