Mahaffy v Mahaffy

1. [1]

   SIMPSON JA: These proceedings arise out of litigation that took place over a period of years, commencing in May 2006, in the District Court (in Tamworth), the Supreme Court of New South Wales and this court. The parties to the litigation were David Mahaffy (the present appellant), D B Mahaffy and Associates Pty Ltd, and Jeffrey Mahaffy (the present respondent). The proceedings culminated in a notice of motion filed in this court on 30 November 2010, in which Jeffrey Mahaffy sought (i) an order that David Mahaffy:

2. [2]

   Attached to the notice of motion was a “Statement of Charge” that was subsequently amended on at least two occasions. The final document, a “Further Amended Statement of Charge” (the FASoC), outlined 13 instances of conduct on the part of the appellant that the respondent alleged constituted contempt. The 13 instances were treated, in the language of the criminal law, as charges or counts. It is convenient to continue to use that terminology. To each count were appended a series of particulars, in some cases numerous. All counts arose out of aspects of the manner in which the appellant had conducted the litigation.

3. [3]

   The proceedings were remitted by this court to the Common Law Division of the Supreme Court. By amended notice of motion filed on 2 August 2011 the appellant sought summary dismissal of the proceedings. He was in part successful. On 28 March 2013 Garling J summarily dismissed four of the 18 counts contained in what was then the Statement of Charge, and gave leave to the respondent to file a FASoC: Mahaffy v Mahaffy [2013] NSWSC 245. Proceedings on the resulting document (the FASoC, which contained the 13 counts) took place before Schmidt J (the primary judge) on 29 September 2014. The respondent represented himself to prosecute the charge of contempt. The appellant did not appear and was not represented.

4. [4]

   On 16 February 2015 the primary judge found the appellant guilty of eight out of the 13 counts itemised in the FASoC: D B Mahaffy & Associates v Mahaffy [2015] NSWSC 66. I will refer to the findings of guilt as “convictions”. On 18 December 2015 the primary judge sentenced the appellant to a fixed term of imprisonment for 10 months: D B Mahaffy & Associates v Mahaffy [2015] NSWSC 1959. In sentencing, the primary judge used the aggregate sentencing provisions of the Crimes (Sentencing Procedure) Act 1999 (NSW), s 53A. In accordance with s 53A(2)(b), her Honour indicated the sentences that she would have imposed in respect of each individual count of contempt. Since the appellant was not present at court at the time sentence was imposed a warrant for his arrest was issued and the sentence was expressed to commence from the date of his arrest. The warrant was executed on 18 December 2015, and the appellant was taken into custody.

5. [5]

   The appellant appealed against the severity of the sentence imposed. He remained in custody until 28 July 2016 when he was granted conditional bail pending the hearing of the appeal. He did not, initially, challenge the convictions. His appeal was limited to the sentence imposed. He pleaded two grounds only:

6. [6]

   Written submissions, in support of these grounds, signed by counsel, were provided. As it then appeared that the respondent, who was the instigator of the charges, would not appear, the Crown Advocate (Dr Kell) sought leave to appear as amicus curiae in order to assist the court in the resolution of the appeal. Leave was given.

7. [7]

   On the day the appeal was listed for hearing in this court (7 April 2017), counsel appeared for the appellant. The respondent appeared in person. Counsel for the appellant (expressing himself “with some trepidation”) sought an adjournment in order to enable the appellant to appeal against the convictions. The court determined that the appeal against sentence should proceed, but the matter then be adjourned for the purpose of allowing the appellant to file an appeal against the convictions, for which leave was granted.

8. [8]

   After a hiccup that caused further delay the matter resumed on 24 July, and continued on 15 August. The appellant was represented by counsel, the respondent appeared in person, and the Crown Advocate continued to appear as amicus.

Background

1. [9]

   The appellant and the respondent are brothers. The contempt proceedings are the culmination of a long and bitter family dispute between them. For present purposes, the background circumstances can be recited with relative brevity.

2. [10]

   The appellant is a qualified accountant. Prior to 2009 he operated an accountancy practice through a company, D B Mahaffy & Associates Pty Ltd (DBMA), in Narrabri and Wee Waa. The appellant was the sole director, shareholder and the controlling mind of DBMA. The respondent is also a qualified accountant. He was employed by DBMA, and ran the Wee Waa office. In May 2005 the respondent suffered a stroke and was unable to work for a protracted period of time. Thereafter, disputes arose between the brothers concerning the respondent’s entitlements. These disputes did not then result in litigation. The appellant closed the Wee Waa office. The dispute between the brothers escalated when the respondent was approached by former clients of DBMA and asked to open an accountancy practice in Wee Waa, and did so. It was then that the litigation commenced. The appellant and DBMA sued the respondent in the District Court, claiming $750,000 in damages. The precise nature of the claim does not appear from the materials before this court. According to a letter written by the appellant in August 2010, his claim was for recovery of files, records and other property of DBMA, which he alleged had been unlawfully removed by the respondent. The respondent cross-claimed, naming DBMA and the appellant as, respectively, first and second cross-defendants. Again, the precise nature of the cross-claim does not appear from the evidence.

3. [11]

   The litigation took an extraordinary course, some of which it will be necessary to detail below. Numerous notices of motion were filed by the appellant. Costs orders were repeatedly made against him or DBMA, none of which was met. Over a period of several years (at least between September 2009 and September 2012), numerous garnishee orders were made in favour of the respondent, against bank accounts held in the appellant’s name or that of DBMA. Initially, some of the garnishee orders produced some funds.

4. [12]

   The cross-claim resulted in judgment in favour of the respondent for about $400,000 against the appellant and DBMA on a joint and several basis.

5. [13]

   On 4 March 2013 the appellant was declared bankrupt and on 18 March DBMA was deregistered. (Its registration was later reinstated, and it continued to trade, although, apparently, without a director.)

The proceedings at first instance

1. [14]

   The contempt proceedings took place before the primary judge on 29 September 2014, on the basis of the FASoC referred to above (containing 13 individual allegations of contempt). The respondent, as plaintiff, represented himself; the appellant did not appear, either personally or by a legal representative. A vast amount of documentary material was presented. The respondent put his evidence in the form of six affidavits sworn by him on 17 June 2011, 30 October 2013, 9 September 2014, 11 September 2014 (identical to that of 9 September), 2 April 2015 and 24 April 2015, which traced the history of the litigation, and to which were annexed a large volume of documentation.

2. [15]

   Since the appellant did not appear, the respondent’s evidence was undisputed. Much, but not all, of what he asserted was supported by primary documents, such as court records and transcripts.

3. [16]

   On 16 February 2016 the primary judge gave judgment. As indicated above, she found the appellant guilty of eight of the charges. She thereafter gave the appellant the opportunity to make submissions with respect to the penalty to be imposed, but he did not avail himself of that opportunity. The penalty proceedings took place on 10 December 2015, and on 18 December 2015 the primary judge imposed the sentence mentioned above.

4. [17]

   Against that background, the various instances of contempt of which the appellant was found guilty may now be outlined.

Litigation chronology

1. [18]

   What follows is a much abbreviated chronology of the litigation. For the purpose of this part of these reasons, and to avoid confusion, I will refer to the appellant and the respondent by their names.

2. [19]

   As mentioned above, in May 2006 DBMA and David Mahaffy filed in the District Court at Tamworth a Statement of Claim, naming Jeffrey Mahaffy as defendant. On 19 July 2006 Jeffrey Mahaffy filed a cross-claim. Also mentioned above, the nature of the claim and the cross-claim are not revealed by the evidence. What may be discerned from the materials is that DBMA was named in the cross-claim as the first cross-defendant, and David Mahaffy was named as the second cross-defendant. Various orders and procedural directions were made from time to time thereafter, including for discovery and for costs. An amended statement of claim was filed (in Sydney) on 28 March 2008. It is not possible, from the materials provided, to know with precision what happened in the litigation in the period between commencement of the proceedings and the events to which I will now make reference.

3. [20]

   On 12 February 2009 the matter came before Gibb DCJ. What appears to be a court record (Continuation Sheet) contains a number of notes, and documents orders and directions made. The Continuation Sheet for 12 February 2009 records, inter alia, the following:

4. [21]

   It is apparent that “P” is a reference to DBMA (as plaintiff) and “D” is a reference to Jeffrey Mahaffy (as defendant). (This court was informed that, by this time, David Mahaffy was no longer a party to the proceedings. The circumstances in which he ceased to be a party are not disclosed. In the appellant’s letter of August 2010, referred to above, he said that he had never properly been a party and was removed by consent in 2008.)

5. [22]

   Jeffrey Mahaffy deposed in his affidavit of 17 June 2011 that the costs were not paid by 12 August 2009 as required by the Order numbered 30.

6. [23]

   On 26 August 2009 Jeffrey Mahaffy filed in the District Court a notice of motion seeking an order for the immediate payment “from the plaintiff for a determined amount”, pursuant to orders made on 12 February 2009.

7. [24]

   On 4 September 2009 the matter came before McLoughlin DCJ. A “Continuation Sheet” records that his Honour made, inter alia, the following notes and orders:

8. [25]

   According to the affidavit of Jeffrey Mahaffy, no payment has been made pursuant to the orders of Gibb DCJ or those of McLoughlin DCJ. It is again to be observed that “the Plff” against whom the orders were made was not David Mahaffy, but DBMA. The failure of DBMA to pay the costs ordered gave rise to Count 1 of the FASoC. In framing Count 1 as he did, Jeffrey Mahaffy plainly recognised that the orders were made against DBMA and not against David Mahaffy. Count 1 was, accordingly, framed in the following terms:

9. [26]

   On 12 November 2009 Jeffrey Mahaffy filed two notices of motion, one of which claimed the following orders:

10. [27]

    It seems that on 28 September 2009 DBMA also filed a notice of motion, seeking to vacate the orders of 4 September 2009; in response, Jeffrey Mahaffy requested that “the plaintiff” (DBMA) be ordered to make some payment in respect of the costs orders. McLoughlin DCJ agreed and, on 19 November, ordered:

11. [28]

    The matter returned to McLoughlin DCJ on 7 December 2009. The “Continuation Sheet” records the following:

12. [29]

    According to the affidavit of Jeffrey Mahaffy, that payment has not been made. This gave rise to Count 2 on the FASoC which is framed as follows:

13. [30]

    Again, it can be seen that Jeffrey Mahaffy recognised the difficulty in holding David Mahaffy legally responsible for the non-payment of costs ordered against DBMA.

14. [31]

    The primary judge dismissed this charge.

15. [32]

    On 5 March 2010 the matter was again before McLoughlin DCJ. What appears to be a court document records the following:

16. [33]

    What emerges from this record of orders is that McLoughlin DCJ made an order that David Mahaffy (as second cross-defendant) pay Jeffrey Mahaffy’s costs of the notice of motion, and, importantly, extended the costs orders previously made against DBMA by Gibb DCJ on 12 February 2009, and quantified by himself on 4 September 2009, to include David Mahaffy. He did not, however, fix a time within which payment was to be made.

17. [34]

    On 26 March 2010 Jeffrey Mahaffy filed a notice of motion seeking a number of orders, of which the sixth was:

18. [35]

    On 16 April 2010 a hearing took place before McLoughlin DCJ. The record indicates the following:

19. [36]

    Jeffrey Mahaffy has deposed that those costs have not been paid.

20. [37]

    These circumstances gave rise to Count 3 in the FASoC, which asserts:

21. [38]

    On 11 May 2010 Jeffrey Mahaffy filed a further notice of motion in which he sought, effectively, summary judgment on the cross-claim.

22. [39]

    On 14 May 2010 a hearing of this notice of motion took place before McLoughlin DCJ. David Mahaffy, through his legal representative, offered security by way of mortgage over his property at Narrabri. As a result, McLoughlin DCJ ordered:

23. [40]

    Jeffrey Mahaffy deposed that a registered mortgage in his favour was not provided in accordance with the order by 18 May 2010, although such a document was provided on 28 June 2010. That the mortgage was not provided within the time specified was not the basis for a separate count. Rather, Count 4 was framed as follows:

24. [41]

    On or about 23 September 2010 DBMA and David Mahaffy filed in the Equity Division of the Supreme Court a summons seeking interlocutory orders restraining the sale of the Narrabri property (pursuant to the mortgage granted to Jeffrey Mahaffy) and a stay of the District Court orders of 4 September 2009, 16 April 2010 and 14 May 2010, a final order setting aside the mortgage, and a declaration that Jeffrey Mahaffy was not entitled to exercise a mortgagee’s power of sale without first having served notice under s 57(2)(b) of the Real Property Act 1900 (NSW).

25. [42]

    An affidavit in support of the application was sworn by David Mahaffy. The basis of the application appears to have been that David Mahaffy wished to challenge the costs orders in respect of which the mortgage had been granted, and that he had felt under pressure to agree to executing the mortgage documents. He gave the usual undertaking as to damages. In doing so, he deposed, in the affidavit:

26. [43]

    On the same day, after an ex parte hearing, an interim order was made restraining Jeffrey Mahaffy from selling the Narrabri property. On 1 October 2010, after a (presumably contested) hearing, Rein J in the Equity Division ordered that the summons be dismissed and ordered DBMA and David Mahaffy within seven days to pay Jeffrey Mahaffy $1100 for expenses associated with the application.

27. [44]

    Jeffrey Mahaffy deposed that no money has been paid by either DBMA or David Mahaffy.

28. [45]

    The failure to make that payment gave rise to Count 9 in the FASoC, which was in the following terms:

29. [46]

    On 5 July 2010 Jeffrey Mahaffy filed and served on DBMA and David Mahaffy subpoenas to produce documents. The schedule to each subpoena identified bank records and tax invoices as the documents required to be produced. The return date was 16 July 2010. Each subpoena named Jeffrey Mahaffy as the contact person.

30. [47]

    On 8 July 2010 David Mahaffy, identifying himself as the Managing Director of DBMA, wrote to Jeffrey Mahaffy, saying:

31. [48]

    The following day, 9 July 2010, Jeffrey Mahaffy responded by asserting that the subpoenas had:

32. [49]

    No documents were produced by either DBMA or David Mahaffy by 16 July. On that day the return date was extended to 23 July, with leave granted to DBMA and David Mahaffy to file notices of motion seeking to have the subpoenas set aside. By 23 July no documents had been produced. The return date was further extended to 27 July. A direction was given to DBMA and David Mahaffy to file, by 26 July, affidavit evidence addressing their failure to appear and their failure to comply with the subpoenas.

33. [50]

    No affidavits were filed. A further extension was granted to 6 August, with the warning that if there were a failure to comply, the defences to the cross-claim would be struck out.

34. [51]

    On 6 August a box of documents was deposited at the court. Jeffrey Mahaffy inspected the documents and formed the view that they did not fully meet the requirements of the subpoena. He compiled two lists of what he considered to be the missing documents, one with respect to DBMA and one with respect to David Mahaffy. Further documents were produced on 12 August. Jeffrey Mahaffy considered that these also failed fully to answer the description of documents in the schedules to the subpoenas. He compiled two further lists. The matter was listed before McLoughlin DCJ on a number of occasions with respect to the subpoena compliance issues.

35. [52]

    What Jeffrey Mahaffy asserts to be noncompliance (or inadequate or incomplete compliance) with the requirements of the subpoenas is the basis for Count 6 in the FASoC, which is in the following terms:

36. [53]

    It seems that, on a date not disclosed, a summons seeking leave to appeal against the costs orders of 4 September 2009 and 16 April 2010 was filed on behalf of DBMA and David Mahaffy in this court.

37. [54]

    The summons was listed for hearing on 23 September 2010. DBMA was represented by counsel, who sought an adjournment. The matter was heard by Giles JA and Sackville AJA. After some discussion Giles JA said:

38. [55]

    The hearing concluded, with the court fixing 8 October as the date for resumption, and saying:

39. [56]

    The matter was finally before the court on 3 December 2010. DBMA was represented by the appellant. The respondent appeared in person. There was evidence before the court that no part of the $22,000 – specified as the “terms” on which the adjournment had been granted – had been paid. After hearing the appellant and the respondent, the court dismissed the application for leave to appeal. One of the factors taken into account in the court’s reaching that decision was the failure of the appellant to make the payment of $22,000.

40. [57]

    Jeffrey Mahaffy has deposed that he has not been paid $22,000 or any amount by DBMA or David Mahaffy. This was the foundation for Count 8 of the FASoC, which was in the following terms:

41. [58]

    The summons seeking leave to appeal returned to this court, again constituted by Giles JA and Sackville AJA, on 8 October 2010. David Mahaffy appeared in person. Jeffrey Mahaffy did not appear (he later deposed in an affidavit that he had been late, and had attended the wrong court).

42. [59]

    The transcript records that David Mahaffy said:

43. [60]

    He then informed the court that he proposed to file a notice of motion in the District Court seeking to have the costs orders set aside. The matter was adjourned to 3 December 2010.

44. [61]

    This gave rise to Count 10 on the FASoC, which was in the following terms:

45. [62]

    Notwithstanding that the summons filed on 23 September 2010 (seeking injunctive relief in respect of the sale of the Narrabri property) was, on 1 October 2010, dismissed, on 28 October David Mahaffy filed a summons in the Equity Division, again seeking orders restraining the sale of the Narrabri property, this time pending hearing of the application for leave to appeal against the costs orders, and, alternatively, an order that money be paid into a Supreme Court trust account pending hearing of the application for leave to appeal.

46. [63]

    The application was supported by two handwritten affidavits, in which David Mahaffy asserted that he had not been served with “a 57(2)(b) notice”, and made other assertions about the validity of the proposed option. These latter assertions appear to have been rejected by the judge hearing the application.

47. [64]

    He appears also to have relied upon the affidavit which he had filed in support of the earlier application, although this affidavit was given a new date and new number.

48. [65]

    In any event, on 28 October 2010 David Mahaffy was successful in obtaining a second temporary injunction restraining sale of the property. However, on 2 November 2010 White J dismissed the second summons with an order that David Mahaffy pay Jeffrey Mahaffy’s costs of those proceedings: Mahaffy v Mahaffy [2010] NSWSC 1358.

49. [66]

    Thereafter, and notwithstanding the dismissal of the two summonses, David Mahaffy, on five separate occasions, filed in the Land and Property Management Authority caveats claiming an interest in the Narrabri property, which had the effect of preventing its sale.

50. [67]

    This course of conduct gave rise to Count 12 in the FASoC, which was in the following terms:

51. [68]

    On 25 January 2011 judgment was given in favour of Jeffrey Mahaffy against DBMA. (This judgment does not appear in the materials provided to this court; it may be that it was entered as a default or summary judgment.) On 24 February 2011, judgment was entered in the amount of $390,333.43. (Curiously enough, the liability was expressed to be on a “joint and several basis”, although only DBMA was identified as a party. This may be because, although David Mahaffy was removed as plaintiff in the original proceedings, he remained a cross-defendant.)

52. [69]

    On 16 July 2010, dealing with Jeffrey Mahaffy’s notice of motion of 26 March 2010, McLoughlin DCJ ordered:

53. [70]

    At the same time, he dealt with a notice of motion filed by DBMA on 28 September 2010. As no copy of this notice of motion appears in the materials before this court, it is not clear what orders were sought. In any event, what his Honour said in relation to that notice of motion was:

54. [71]

    Jeffrey Mahaffy deposed:

55. [72]

    This gave rise to Count 5 in the FASoC, in the following terms:

56. [73]

    Counts 7 and 11 both concern a variety of statements made by David Mahaffy that were derogatory or disrespectful of the courts, or of individual judges. Count 7 was framed in the following terms:

57. [74]

    Subscribed to the charge were more than six pages of particulars. Eleven separate publications were relied on. These included letters to judges or employees in either the District Court, the Supreme Court or the Court of Appeal, and affidavits and notices of motion filed in various proceedings.

58. [75]

    There is no question that the content of the documents was abusive and, to put it mildly, intemperate.

59. [76]

    It would not be a useful exercise to attempt to set out the entirety of the matters of which complaint is made. A sample will suffice.

60. [77]

    In a letter directed to the associate to the Acting Chief Judge of the District Court dated 27 August 2010, headed “Formal complaint against Judge McLoughlin of District Court”, David Mahaffy complained that costs orders made were “incorrect” or “totally incorrect”, and went on to say that “this is biased to the Plaintiff”. He went on to assert that McLoughlin DCJ “continually makes biased remarks pointed at the Plaintiff [DBMA] and myself”, described him on at least three occasions as “totally biased” and said that he would make a formal complaint with the Judicial Commission of New South Wales. In a letter dated 5 October 2010 addressed to the associate to McLoughlin DCJ, he made assertions of bias on the part of McLoughlin DCJ. In various notices of motion and affidavits filed in the Supreme Court and the District Court over a period between October 2010 and April 2011, and letters addressed to the District Court and this court, he repeated his allegations of bias, of “incorrect orders” and stated that McLoughlin DCJ was “under investigation”.

61. [78]

    On 3 December 2010 David and Jeffrey Mahaffy appeared before this court, constituted by Giles JA and Sackville AJA, in a proceeding to which reference has already been made. That was the proceeding in which David Mahaffy was finally refused leave to appeal against the orders of McLoughlin DCJ. During the course of that hearing, he said (as recorded in the transcript):

62. [79]

    David Mahaffy continued in other correspondence and communications to assert bias on the part of McLoughlin DCJ. In a letter addressed to this court dated 14 March 2011, he wrote:

63. [80]

    In an affidavit filed in the Supreme Court he again asserted bias on the part of McLoughlin DCJ and again said that the judge had:

64. [81]

    As indicated, this course of communication gave rise to Count 7, of which David Mahaffy was convicted and in respect of which an indicative sentence of imprisonment for 8 months was specified.

65. [82]

    Count 11 concerned similar conduct in relation to White J, then of the Equity Division of the Supreme Court of New South Wales. The count is framed in the following terms:

66. [83]

    Three items of correspondence and one notice of motion were particularised as the foundation for this count.

67. [84]

    In a notice of motion filed in the Supreme Court on 10 November 2010, David Mahaffy wrote:

68. [85]

    In a letter dated 10 March 2011 addressed to the Supreme Court, David Mahaffy advised that, in relation to proceedings to which he referred, he would object to certain judges (whom he did not name) hearing the matter, on the ground of bias.

69. [86]

    In a second letter dated 29 June 2011 addressed to the Supreme Court, he wrote:

70. [87]

    Finally, in a further letter to the Supreme Court dated 29 July 2011, David Mahaffy wrote:

71. [88]

    David Mahaffy was convicted of this count and an indicative sentence of 6 months was specified.

72. [89]

    Between September 2009 and September 2014 Jeffrey Mahaffy issued numerous garnishee orders directed to financial institutions in which he believed either David Mahaffy or DBMA held accounts.

73. [90]

    David Mahaffy thereafter took steps to have his income from his accountancy practice paid into the practice’s trust account, which was immune from garnishee orders. This gave rise to Count 13 in the FASoC which was in the following terms:

74. [91]

    It will be seen that the convictions fall generally into four categories: (i) contempt constituted by disobedience of court orders (generally orders for payment of costs); (ii) contempt constituted by conduct in and around the various proceedings that, it was alleged, brought the legal system into disrepute (these were, generally, abusive, contemptuous and vexatious letters or documents filed in proceedings); (iii) contempt constituted by failure to comply with a subpoena; and (iv) contempt constituted by conduct designed to frustrate the orders of the courts.

The primary judgment

1. [92]

   Drawing on the judgment of Garling J in Commissioner for Fair Trading v Rixon (No 2) [2014] NSWSC 431, the primary judge set out the relevant applicable legal principles. I paraphrase for brevity:

2. [93]

   Having regard to the grounds of appeal, an important paragraph in the judgment is [30], which I set out in full:

3. [94]

   With respect to those counts concerning derogatory or disrespectful comments about judicial officers, the primary judge stated the relevant principles as follows (again paraphrasing for brevity):

4. [95]

   At a number of points in the judgment, in the consideration of the individual counts, the primary judge referred to the failure of the appellant to participate in the hearing or to raise issues that might have provided an answer to one or more of the charges. She recognised that a possible defence to a charge of contempt by non-payment of a money order is impecuniosity. In that context, by way of example, she said:

5. [96]

   On a number of occasions she referred to the evidence adduced by the respondent as “unchallenged”. She specifically referred to the failure of the appellant to give or call evidence in relation to the capacity, either of himself or of DBMA, to meet the costs orders made.

6. [97]

   The primary judge then dealt in detail with each of the counts in the FASoC. She found that, of the 13 counts, five were not proved beyond reasonable doubt, and that eight were so proved. The most convenient course is to explain her reasons in relation to each of those counts when dealing with the grounds of appeal.

The appeal

1. [98]

   Pursuant to leave granted on 7 April 2017, an amended notice of appeal was filed, which identified 48 separate grounds of appeal against conviction. These were broken into three categories, substantially representing the categories of conviction outlined above, and identified as “the money order charges” (Grounds 4-37), “the court behaviour charges” (Grounds 38-45) and “the subpoena charges” (Grounds 46-51). Count 13, concerning the allegation that the appellant deliberately frustrated the intention of the court and the purpose of the orders in making the various costs orders, was incorporated in the category dealing with “the money order” counts.

2. [99]

   A repeated ground of appeal, pleaded in respect of a number of counts, that the primary judge erred in allowing into evidence material that was inadmissible, was withdrawn.

3. [100]

   A ground that was pleaded in relation to a number of counts was (for example, Ground 11):

4. [101]

   I have referred above to some of the passages in the judgment which are said to give rise to this ground. Effectively, her Honour held that the appellant’s failure to give evidence justified a conclusion that he did not challenge the case advanced against him. The primary judge took this into account specifically in respect of those counts in which a defence might have been raised of impecuniosity, in relation to Count 6 (the subpoena count) and Count 11 (allegedly contemptuous allegations made about White J).

5. [102]

   Counsel for the appellant relied on a passage from Azzopardi v The Queen (2001) 205 CLR 50; [2001] HCA 25, as follows (Gaudron, gummow, Kirby and Hayne JJ):

6. [103]

   However, as counsel recognised, the High Court then went on to consider in detail the earlier decision in Weissensteiner v The Queen (1993) 178 CLR 217; [1993] HCA 65 and said:

7. [104]

   This passage, in my opinion, resolves the issue. One circumstance in which the primary judge took into account the failure of the appellant to give evidence was in her consideration of a potential defence of incapacity to pay. It was the appellant who had knowledge of his own, and (as sole director) DBMA’s capacity to pay. It was not an error for the primary judge to approach that question in the manner in which she did.

8. [105]

   There is no error in the way the primary judge addressed this issue. There was no way, other than through evidence advanced from or by the appellant, or some other person on DBMA’s behalf, that her Honour could have been apprised of DBMA’s financial position. Moreover, she noted that the satisfaction of some garnishee orders showed that DBMA had had resources from which it could have met the orders. There is no substance in this ground.

9. [106]

   A related ground, repeated in respect of various of the convictions, was of error in finding the charges proved beyond reasonable doubt, where “an inference [of] innocence” had not been excluded.

10. [107]

    It is sufficient to say that there was no occasion, in relation to any of the counts on which the appellant was convicted, where an inference of innocence reasonably appeared on the evidence. These grounds should be rejected.

11. [108]

    I now turn to deal with the individual counts of which the appellant was convicted.

The costs orders

1. [109]

   The orders the subject of Count 1 were made by McLoughlin DCJ on 4 September 2009. They were relevantly in the following terms:

2. [110]

   As a preliminary, two things may be noted about the terms of these orders. First, they were made against DBMA and not against the appellant (a circumstance that did not escape the notice of the respondent in drafting the FASoC). Second, they did not specify any time for compliance.

3. [111]

   The FASoC particularised numerous occasions on which the appellant had (himself or through DBMA) sought, in various ways, vacation of the costs orders, or a stay thereof. Three such applications were filed by notice of motion in the District Court, on, respectively, 23 September 2009, 28 September 2009 and 4 March 2010; two in this court, associated with applications for leave to appeal (17 June 2010 and 10 September 2009); one in the Equity Division of the Supreme Court (23 September 2010, associated with an application for injunctive relief concerning the sale of the Narrabri property); and one in the Common Law Division of the Supreme Court, associated with a variety of other orders sought (10 November 2010).

4. [112]

   All attempts were unsuccessful and the orders of 4 September remained extant.

5. [113]

   The primary judge concluded that the appellant sought to thwart the respondent’s recovery of costs from DBMA: at [63]. In this respect she took into account the repeated attempts made by the appellant to have the orders vacated or stayed. She took into account that the appellant had not sought, by evidence, to establish an inability, as distinct from refusal, to pay: at [68]. (I have already held that this was a permissible approach.) She considered that the evidence established that DBMA did have the capacity to pay should it have chosen to do so, but, instead, expended its resources “in the pursuit of the futile course which [the appellant] caused [DBMA] to take”: at [70]. She held:

6. [114]

   She also considered it “pertinent” that subsequent orders expressly extended the operation of the orders to the appellant, so as to bind him as well as DBMA. (In my opinion that is not a relevant circumstance, given that the charge is framed in terms of failure on the part of the appellant to cause DBMA to satisfy the order. There is no count based on an allegation that the appellant failed to comply with the order directed to him. However, this is not identified as an error of which complaint is made and I leave it to one side.)

7. [115]

   The complaints made with respect to the conviction on Count 1 are, essentially:

Determination

1. [116]

   Counsel for the appellant relied upon a line of authority culminating in Sigalla v TZ Ltd [2011] NSWCA 334.

2. [117]

   Sigalla was a case in which an injunction had been granted restraining a company, ZMS Investments Pty Ltd, from selling a certain property. Notwithstanding the injunction, ZMS entered into a contract for sale of the property. Proceedings in contempt were brought against both ZMS and one of its two directors, Mr Sigalla. Both were found guilty: TZ Ltd v ZMS Investments Pty Ltd [2009] NSWSC 1465 (Austin J). Austin J held:

3. [118]

   A different approach was taken on appeal. Young JA, with whom Macfarlan JA and Handley AJA agreed, said:

4. [119]

   He then referred to a passage in the decision of the High Court in Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530; [2004] HCA 56, in which the High Court said (at 571-572 [121]):

5. [120]

   Young JA concluded that it had not been open to convict Mr Sigalla of the contempt committed by ZMS Investments.

6. [121]

   There is, however, another line of authority, to which it seems that the court in Sigalla was not referred. That line of authority is specifically referable to the obligation of a director of a company, aware of an order of a court, to take reasonable steps to ensure compliance with the order.

7. [122]

   In Attorney-General for Tuvalu v Philatelic Distribution Corporation Ltd [1990] 1 WLR 926 at 936 Woolf LJ said:

8. [123]

   That proposition was adopted by Kiefel J (as the Chief Justice then was) in Australian Competition and Consumer Commission v Goldstar Corporation Pty Ltd [1999] FCA 585. Her Honour said:

9. [124]

   In Hurd v Zomojo Pty Ltd [2015] FCAFC 148, Besanko and Gilmour JJ said:

10. [125]

    That line of authority is directly referable to this case. The appellant was the sole shareholder and director of DBMA. He controlled what it did and what it did not do. If DBMA could be held in contempt for failure to comply with the order of McLoughlin DCJ, then it follows, on the authority of the decisions extracted above, that the appellant could also be held in contempt.

11. [126]

    One difficulty in that approach is that no time was fixed by which payment was required to be made. That raises a question: at what point could it be said that either DBMA or the appellant was in contempt of the order? The primary judge (reasonably in my opinion) took into account the course of conduct of the appellant in repeatedly making unsuccessful applications to vacate or stay execution of the orders, as evidence of his determination not to comply with the orders.

12. [127]

    The orders were made on 4 September 2009. Leave to appeal against them was refused on 3 December 2010, all other attempts at stifling them having failed. It is reasonable to pinpoint one month after the final refusal as a point at which the noncompliance was established. Making further allowance for the intervening Christmas period, I would conclude that 30 January 2011 was the date on which it could properly be said that failure to make the payment amounted to wilful disobedience of the orders. I have concluded that there was no error in the approach taken by the primary judge to the appellant’s liability for the failure of DBMA to comply with the orders.

13. [128]

    The next group of grounds of appeal against this conviction concern the purpose for which the order was made. It was submitted that recourse to the orders as originally made by Gibb DCJ on 12 July 2009 indicates that “the rationale” of the orders was to secure case management of what was, even by then, an unruly case, and to prevent further delay. It was further submitted that the orders made by McLoughlin DCJ achieved that purpose, and that, ultimately, the appellant was prevented from pursuing his claim (the claim being permanently stayed).

14. [129]

    No such argument was put to the primary judge. I would reject both propositions. It is quite apparent that, by 12 February 2009, the proceedings were in disarray, and even had become unmanageable. The orders made by Gibb DCJ were not made to achieve case management, but to do some justice to the respondent in respect of the costs incurred by him by that date. That the warnings concerning future progress of the appellant’s claim were given does not affect the purpose of the orders (which was, in any event, irrelevant). That disposes of the first proposition, and makes it unnecessary to deal with the second.

15. [130]

    A third basis of appeal was what was said to be the failure on the part of the primary judge to consider “theories consistent with innocence”. This can be disposed of briefly. No “theories consistent with innocence” were advanced to the primary judge. She was not obliged to hypothesise what might have motivated the appellant to disobey the orders (or cause DBMA to do so). However, the submissions in support of this ground also suggested that there was ambiguity in the orders made by Gibb DCJ, tied up as they were with cautions directed to the appellant about a possible stay of further proceedings. A sufficient answer to this proposition is that it is not the Gibb DCJ orders that are the subject of Count 1 – it is the unambiguous orders made by McLoughlin DCJ. It was also submitted that there was evidence to suggest that DBMA was not in a position to pay. In this respect reliance was placed on an affidavit sworn by the respondent on 23 August 2009 in support, inter alia, of the costs orders in which he raised concerns about DBMA’s solvency. Against that was evidence taken into account by the primary judge from the appellant himself, that DBMA was solvent. Only the appellant was in a position to provide definitive evidence of DBMA’s capacity (or incapacity) to pay, which I have dealt with above.

16. [131]

    The final ground in relation to this count could be said to be one of “triviality”. It was submitted that it was an error to treat the act of contempt as sufficiently serious to warrant punishment, where some other method of doing justice was available and was in fact employed (that is, permanent stay of DBMA’s proceedings).

17. [132]

    The primary judge was entitled to take into account, in assessing the seriousness of each instance of contempt, the whole of the appellant’s conduct. The failure to take steps to ensure DBMA’s compliance with the orders was a relatively serious instance of contempt which was, in any event, met with a relatively lenient indicative sentence of 4 months. I would reject this ground.

18. [133]

    I would dismiss the appeal against the conviction on Count 1.

19. [134]

    In Count 5 the respondent asserted noncompliance with what was said to be a costs order in the amount of $25,000 made by McLoughlin DCJ on 16 July 2010. Examination of the court records, however (on which the respondent relied to prove his case), fails to disclose any such order made on that date. The relevant costs order, as the notes from the Continuation Sheets show, was that made by him on 5 March 2010. McLoughlin DCJ did not then quantify the order; that he did on 16 July 2010. The order so made was for payment of costs of $134,679.46. No order for payment of the sum of $25,000 within seven days was made. Rather, McLoughlin DCJ granted a stay of the substantive order conditional upon the payment by the appellant of $25,000. That does not constitute an order for payment of that sum; the proper construction is that, upon the expiration of the seven day period, in the absence of payment of that sum, the stay became inoperative, and the costs order for the larger sum became enforceable.

20. [135]

    The primary judge appreciated that this was the case. She said:

21. [136]

    The primary judge proceeded, in my opinion, upon the erroneous construction of the court record of what McLoughlin DCJ did on that occasion. It was plainly not put to her that the stated condition of stay of the substantive order did not amount, of itself, to an order for payment.

22. [137]

    The appeal against this conviction must be upheld, and the conviction set aside.

23. [138]

    By Count 8 the respondent alleged contempt constituted by the failure of the appellant to pay the sum of $22,000. The circumstances which gave rise to this count are set out above, and may be restated briefly.

24. [139]

    The appellant’s application for leave to appeal against the costs orders made in the District Court came before this court, constituted by Giles JA and Sackville AJA, on 23 September 2010. DBMA was represented by counsel. Counsel for DBMA sought an adjournment: that was granted “on terms” that DBMA pay the sum of $22,000 (made up of $20,000 as an estimate of costs, and $2,000 as an estimate of the costs of the adjourned application).

25. [140]

    The appellant was warned that failure to make the payment might result in the court declining to hear the application for leave to appeal. (That is in fact what happened.)

26. [141]

    The primary judge considered that the terms of the order of the Court of Appeal were not ambiguous, and bound both DBMA and the appellant.

27. [142]

    I am unable to agree with either of these propositions. As with the “orders” of 16 July 2010 (Count 5), what was done on 23 September did not constitute an order of the court. The requirement that payment of $22,000 be made was explicitly made as a condition of granting the adjournment sought by DBMA. The consequence of non-payment was, as was made abundantly clear by Giles JA, the possibility of DBMA’s application for leave to appeal not being heard. That is what eventuated.

28. [143]

    The appeal against this conviction should be upheld and the conviction set aside.

29. [144]

    This count arose out of the order made by Rein J on 1 October 2010, against both DBMA and the appellant, for the payment to the respondent of $1100 representing expenses incurred in relation to the failed application in September 2010 for an injunction restraining the sale of the Narrabri property.

30. [145]

    It is also necessary to note that, in the proceedings before White J on 2 November 2010, the respondent objected to the hearing of the application, on the basis that, as he asserted, the appellant was in contempt of court by failure to pay the $1100 ordered by Rein J, and was therefore not entitled to be heard. White J rejected that contention, not being satisfied that the appellant (who had not been present in court when the order was made) was aware of the order.

31. [146]

    The appellant was present in court on 2 November 2010. The primary judge therefore, while recognising that the evidence before White J did not establish the appellant’s knowledge of the existence of the order (made by Rein J), concluded that the appellant’s presence in court on 2 November established beyond reasonable doubt that he was, by no later than that date, aware of the order. She considered that there was “no question on the evidence as to his ability to comply with the order …”. In this respect, she made specific reference to the affidavit sworn on 23 September 2010 and filed by the appellant in support of the injunction application.

32. [147]

    Two grounds of appeal were advanced in relation to the conviction on Count 9 (Grounds 28 and 29). The first asserted that it was not open to the primary judge to find, beyond reasonable doubt, that the appellant had the “means and practical ability” to comply with the order. The second focused on the relatively small amount in issue, and asserted that failure to pay was “insufficiently serious” to require punishment, and, further, relied upon what was said to be a finding by the primary judge that the appellant was not aware of the order at the time when it was made. (The last assertion overstates what the primary judge found: in fact, she merely referred, without comment, to the decision by White J that he was not, on the evidence before him, satisfied that the appellant was aware, prior to 2 November 2010, of the existence of the order. That overstatement may, however, be passed over.)

33. [148]

    In his written submissions, counsel for the appellant described the appellant as at 2 November 2010, as being in “a negative asset position” having regard to the existence of the earlier, very substantial, costs orders against him, and a judgment of $390,333.43.

34. [149]

    The last proposition cannot be accepted; the judgment on which reliance was placed was entered on the order of Hungerford ADCJ on 24 February 2011. It did not contribute to any “negative asset position” of the appellant in November 2010.

35. [150]

    While there may be some doubt about the appellant’s knowledge of the order prior to the appearance before White J, the finding of the primary judge that he was from that date aware of it cannot be questioned. The appeal against this conviction should fail.

36. [151]

    A brief chronology of the events concerning the issue of subpoenas by the respondent to DBMA and the appellant has been set out above. The return date was 16 July 2010. There followed some correspondence between the appellant and the respondent. On 16 July both parties appeared before McLoughlin DCJ. The appellant did not produce any documents. A new return date, 23 July before his Honour, was fixed with leave granted to the appellant to file a notice of motion seeking to set aside the subpoenas, also returnable on 23 July 2010. The appellant did not take that course, but still did not produce documents. The proceedings were again stood over to 27 July, on which occasion, again, no documents were produced. By 6 August 2010, when the matter was again before McLoughlin DCJ, the appellant had produced a box of documents. The respondent inspected them and concluded that compliance with the subpoenas was inadequate. He identified the documents he considered ought to have been produced. McLoughlin DCJ requested that the registrar notify the appellant and DBMA about the asserted inadequacies in the production. By 12 August 2010, when the matter was again before McLoughlin DCJ, a folder of additional documents had been provided by DBMA. The respondent was still dissatisfied with the extent of compliance. He prepared two lists, identifying the documents he said should have been produced, but which were not produced. His Honour gave directions concerning the issue, and, on 9 November 2010, gave the appellant and DBMA a final opportunity to produce all documents. The sanction he foreshadowed was that failure to comply might result in DBMA’s and the appellant’s defences to the cross-claim being struck out. That in fact is what happened.

37. [152]

    A charge of contempt constituted by failure to make adequate compliance with a subpoena must establish, not only that documents have not been produced, but also that, at the return date (or adjourned return date) there were such documents in existence, and in the possession or under the control of the recipient of the subpoena: see Markisic v Commonwealth of Australia (2007) 69 NSWLR 737; [2007] NSWCA 92. It is also necessary to show that non-production was wilful disobedience.

38. [153]

    The primary judge said:

39. [154]

    The grounds of appeal in relation to Count 6 assert that her Honour was in error in failing to consider a possible inference consistent with innocence, “namely that the appellant was not obliged to comply”. In written submissions this was expanded to explain that the appellant was not obliged to comply because he had not been provided with conduct money, or, at least, there was no evidence that he had been provided with conduct money. That ground must fail.

40. [155]

    In Hall v Donlon [2011] NSWSC 1088, Brereton J pointed out that the rules requiring conduct money to accompany the issue of subpoena apply only to a subpoena ad test – that is, a subpoena to attend and give evidence.

41. [156]

    In this instance it was not open to rely on the appellant’s failure to provide an explanation for the non-production of the documents identified by the respondent. Before the appellant could properly be found guilty of contempt for noncompliance with a subpoena, it was necessary that there be evidence that the items the subject of the subpoena were in existence, and in his possession or under his control. That evidence was lacking.

42. [157]

    I have come to the view that it was not open to the primary judge to be satisfied beyond reasonable doubt that:

43. [158]

    The evidence establishes two apparent attempts by the appellant to produce the documents. The identification by the respondent of additional documents not produced was informed speculation: that is, as a qualified accountant himself, he was well aware of what documents would have been in existence (or should have been in existence); what he could not say with any degree of certainty was whether those documents remained in existence.

44. [159]

    Two things have given me pause before reaching this conclusion. The first is that the general conduct of the appellant provided no basis for confidence that he would genuinely attempt to comply with the subpoena. Certainly no inference to that effect could be drawn on the evidence. The second is his failure to respond to the explicit opportunity given to him by McLoughlin DCJ to explain the non-production of the hypothesised documents. Were it the case that he had genuinely attempted to produce all that he had that was covered by the subpoena, he could easily have responded with a letter or evidence to that effect. However, neither of those circumstances is sufficient to persuade me that it was proved beyond reasonable doubt that documents not produced were in existence.

45. [160]

    I would uphold the appeal against this conviction.

The “court behaviour” charges

1. [161]

   Count 7 related to a number of instances in which the appellant had, in writing, made statements about McLoughlin DCJ which could properly be described as vilification. Although numerous particulars of this count were given in the FASoC, only a sample has been extracted. The material was contained in letters to the Chief Judge of the District Court, the associate to McLoughlin and one to this court, in notices of motion filed in the District or Supreme Courts and, in one instance, orally in an appearance before this court. Analysis of the communications shows that there were repeated assertions that the judge had made “incorrect” or “illegal” orders, and two assertions that he was under investigation. By far the most serious allegation was of “tampering” with a transcript. He also claimed that the District Court was “very corrupt”. Count 11 related to four communications in which the appellant had referred to White J, in one of which the appellant had accused him of corruption. These were contained in three letters to the Supreme Court and one notice of motion filed in that court.

2. [162]

   The primary judge carefully dealt with each particular. In the case of the accusations made against McLoughlin DCJ, she held that neither the letter to the Chief Judge of the District Court of 27 August 2010 nor the letter to the associate to McLoughlin DCJ of 5 October 2010 constituted contempt. This was because a dissatisfied party to litigation is entitled to raise issues of bias, and to pursue them, even vigorously. Mere discourtesy in words to or behaviour towards, or about, a judge, she held, is insufficient to constitute contempt. With respect to the remaining particulars, she found that the correspondence and documentation did amount to contempt.

3. [163]

   With respect to the affidavit (sworn 1 April 2011) in which the appellant had asserted that McLoughlin DCJ was under investigation and had shown signs of bias, and had gone further and asserted that McLoughlin DCJ had tampered with the tape recordings of the court proceedings, she said:

4. [164]

   The conclusions in relation to Count 11 were expressed in a single paragraph, as follows:

5. [165]

   She accordingly held that the contempt alleged in Count 11 had been established beyond reasonable doubt.

6. [166]

   In the case of both Counts 7 and 11, the grounds of appeal pressed were:

7. [167]

   In his comprehensive written submissions, counsel for the appellant began his argument with respect to Count 7 by focusing on the primary judge’s use of the word “illegally” in [156]. His argument was that a degree of ambiguity attends the words “illegal”, “illegally” and “illegality” in that they may, in common parlance, be taken to refer to conduct contrary to the criminal law, whereas, in the context in which the appellant’s statements were made, it should be taken that he was accusing the judge of making decisions contrary to (civil) law – and that such accusations were far less serious and did not carry the “sinister” connotations of an accusation of criminal illegality. Counsel acknowledged that the allegations of bias were more serious, but contended that the effect was somewhat ameliorated by the fact that those assertions were contained in court documents, and should be seen as the appellant’s attempt to raise a (legitimate) complaint of bias (even if in an intemperate manner).

8. [168]

   Counsel also acknowledged that the appellant’s claims that McLoughlin DCJ had tampered with the tape recordings of the court proceedings were more troubling, and could be seen to interfere with the administration of justice. He contended, however, that these grounds of appeal ought to be determined by asking whether, and, if so, to what extent, there was any actual interference with the administration of justice. This question, he argued, should be answered in the negative. That was, at least in part, because the statements were made in private correspondence with the court rather than “to the public at large”, and that “the good sense of the community” is a sufficient answer to any suggestion that the appellant’s conduct might have achieved any significant interference with the administration of justice.

9. [169]

   In this argument, he was alluding to a number of decisions, particularly Bell v Stewart (1920) 28 CLR 419; [1920] HCA 68 and Fletcher, to each of which reference will be made below.

10. [170]

    Resolution of these grounds calls for a more detailed and comprehensive review of precedent in the relevant class of contempt. An immediate and visceral response, at least to the more serious accusations (in the case of each count) is to agree that they are contemptuous. And, as that word is ordinarily used, they undoubtedly are. But there is a degree of subtlety in the applicable law. What is alleged in these counts to be contempt engages those branches of contempt discussed by Lord Russell of Killowen CJ in R v Gray [1900] 2 QB 36 at 40.

11. [171]

    It is not difficult to state the fundamental proposition:

12. [172]

    That proposition has been adopted in Australia: see R v Nicholls (1911) 12 CLR 280; [1911] HCA 22; Fletcher ; R v Dunbabin; Ex parte Williams; Attorney General for New South Wales v Mundey [1972] 2 NSWLR 887 at 901.

13. [173]

    A second class of contempt identified by Lord Russell is:

14. [174]

    The former proposition has been expressed to be subject to qualification. Indeed, in Gray, Lord Russell immediately went on to say:

15. [175]

    Neither Lord Russell nor the editors of the Law Reports considered it necessary to set out the content of the publication that gave rise to the charge of contempt in Gray; it arose out of an article published in a newspaper following observations made by a judge during the course of a criminal trial. Notwithstanding the qualifications placed upon the general proposition, Lord Russell described the article as containing “scurrilous abuse of a judge in his character of a judge”, and found the publisher guilty of contempt (a finding that was not contested): at 39-40.

16. [176]

    Emphasis has been placed on the need for the conduct, before it can be held to be contempt, to have a tendency to prejudice or embarrass the conduct of proceedings actually pending in a court: John Fairfax & Sons Pty Ltd v McRae (1955) 93 CLR 351 at 370, 372; [1955] HCA 12. (It may here be observed that, in McRae, as in Gray, Mundey and some other cases, attention has been directed to the exercise of a summary power to punish for contempt, as distinct from prosecution on indictment. It does not seem to me that that consideration, which may be anachronistic, affects the principles stated in the cases.)

17. [177]

    More recently, in Mudginberri Station, Gibbs CJ, Mason, Wilson and Deane JJ said (at 106):

18. [178]

    In Mudginberri Station the court was concerned with contempt constituted by disobedience of an injunction. It was not expressly concerned with contempt constituted by scandalising the court. In that part of the judgment in which the extracted passage appears, the court was embarking on a discussion of the existence of, and rationale for, the distinction between civil and criminal contempt. It did, however, identify, as “the underlying rationale” of every exercise of the contempt power that (at 107):

19. [179]

    In Martin v Trustrum (No 2) [2003] TASSC 50, Slicer J said that the basis of the doctrine is:

20. [180]

    The relevant question, therefore, in relation to each of the particulars of these counts, is the effect the publication had, or may have had, on public confidence in the judicial process.

21. [181]

    Consistency in the application of the relevant principles is less easy to identify than their statement. In Bell v Stewart the High Court was concerned with a statutory formulation of contempt, under the Commonwealth Conciliation and Arbitration Act 1904 (Cth), which, in s 83, provided that:

22. [182]

    Two charges were brought under s 83 against Mr Bell, who was the printer and publisher of a newspaper (The Argus). The circumstances may be briefly outlined as follows. A hearing was taking place before the President of the Commonwealth Court of Conciliation and Arbitration: at 420. Mr Bell published in The Argus a somewhat satirical criticism of the presiding judge. It concluded (at 421):

23. [183]

    Mr Bell was charged with two counts of wilful contempt under s 83, and convicted of each. He appealed to the High Court. Knox CJ and Gavan Duffy and Starke JJ considered that proof of contempt depended upon the words used (at 425):

24. [184]

    Isaacs and Rich JJ reached the same conclusion by a different route. They thought that the case involved the limits to which it was permissible to comment publicly on pending litigation, and that the case depended on the meaning and legal effect of the word “wilful” in the legislation and how far the evidence supported a finding of wilfulness: at 427.

25. [185]

    In a passage that has frequently been cited, their Honours said (at 428-429):

26. [186]

    All members of the court joined in allowing the appeal and setting aside the convictions.

27. [187]

    The contempt alleged in Fletcher arose out of an earlier decision of the High Court, R v Wilson; Ex parte Kisch (1934) 52 CLR 234; [1934] HCA 63. To understand the contempt alleged against Fletcher, it is necessary to understand the facts in Kisch which I will state as briefly as possible.

28. [188]

    A Czechoslovakian national, Egon Kisch, had travelled to Australia by ship. He was charged with being a prohibited immigrant. The basis for the allegation was that he failed to pass a “dictation test”. (Immigration law at the time provided that an authorised officer could administer a dictation test of 50 words in a European language. An immigrant who failed the test became a prohibited immigrant.) A test was administered to Mr Kisch in Scottish Gaelic. Mr Kisch was not able to pass the test. By majority, the High Court held that Scottish Gaelic was not a European language, and, accordingly, the charge failed.

29. [189]

    Following that decision, various articles and letters were published in a daily newspaper, The Sydney Morning Herald, most of which were critical of the High Court decision, mentioning specifically the judgment of Rich J. The commentary which followed included assertions that the High Court had displayed “colossal ignorance” of Scottish affairs as well as other criticisms. Mr Kisch sought orders that the editor (Fletcher) and proprietor (John Fairfax and Sons Ltd) of The Sydney Morning Herald be punished for contempt. The application came before Evatt J, sitting as a single judge. Evatt J described the newspaper’s report of the decision as “inadequate and unfair”, which “failed to convey the meaning or effect of [Rich J’s] judgment read as a whole”: Fletcher at 254.

30. [190]

    Evatt J stated a number of legal propositions, which included the following (at 257-258):

31. [191]

    In the same year (1935) Ms Dulcie Williams sought to have the editor and proprietor of another Sydney newspaper (The Sun) dealt with for contempt: R v Dunbabin; Ex parte Williams. Ms Williams was a party to an appeal heard by the High Court in March of that year, which involved consideration of certain Commonwealth legislation. Judgment was reserved. So far as I can ascertain, the case had nothing to do with Mr Kisch. The Sun published an article headed “Courts and Cabinets” which, with a heavy component of irony, attacked the decision of the High Court in Kisch, and other decisions of the High Court: at 434-437. The article is too lengthy to reproduce here, but clearly imputed that the decision in Kisch was contrary to the public interest (in keeping Australia white) and that the “five bewigged heads” sought to subvert the intention of Parliament. It referred to the High Court as “this pestilent Court”. It went on to criticise another decision of the High Court referring to its (that is, the High Court’s):

32. [192]

    Ms Williams apparently thought that the article had the potential to influence the decision of the High Court in the proceedings to which she was a party. She brought contempt proceedings against the editor and publishers of the newspaper, seeking orders that they be punished for contempt.

33. [193]

    Starke J considered that the court ought to (at 446-447):

34. [194]

    His Honour, however, was in the minority. Rich J, with whom Dixon, Evatt and McTiernan JJ agreed, stated the principle as (at 442-443):

35. [195]

    Applying that principle to the facts of the case, his Honour considered that (at 444):

36. [196]

    Dixon J added (at 447-448):

37. [197]

    Mundey was a case that had its origins in a political campaign (opposition to the apartheid regime in South Africa, and Australian participation in sporting events involving racially selected teams). An officer of a trade union and another man who took part in the campaign were tried for, and convicted of, malicious damage to structures at a sporting field. By way of penalty, good behaviour bonds were imposed together with a fine and orders made for compensation for the damage: at 894.

38. [198]

    The proceedings were attended by large numbers of workers, many taken to be members of the trade union. It seems that in order to do so, they had “walked off” construction sites, and there was some suggestion of (unspecified) industrial action: at 898. A significant media contingent also attended. Outside the court after sentencing, the secretary of the trade union (Mr Mundey) was asked some questions by media representatives. He had not arranged the media presence, and had no warning that he would be asked questions. When asked to comment on the decision, he answered that “it” (presumably the verdict of guilty) was a miscarriage of justice, and that counsel had been prevented from putting before the court relevant evidence; he said that the judge was “a racist judge”. He went on to say that the attendance of trade unionists had “stopped the racist judge from sending these two men to jail”. The statements were broadcast on a television station.

39. [199]

    Mr Mundey was charged with contempt, particularised in two ways: the first constituted by scandalising the court by making the remarks, and the second because the remarks were made after the convictions and before the time prescribed for appeal had expired.

40. [200]

    The case came before Hope JA sitting as a single judge. After a lengthy review of the relevant authorities, his Honour concluded that that part of Mr Mundey’s answer in which he asserted that a miscarriage of justice had occurred and that the two accused had been prevented from giving important and relevant evidence did not constitute contempt. He gave a benign interpretation to the assertion that the judge was “racist”, taking the view that the remark could be seen as a comment on racism in society generally.

41. [201]

    The second part of the answer (that it was the presence of members of the union that brought about the non-custodial penalties) he viewed differently. This, he considered, meant that the judge had decided to impose sentences of imprisonment, but changed his mind because he was overawed by the actions of workers walking off their jobs and by the threat to call a national strike. This, he thought, was (at 914):

42. [202]

    In his extensive review of authority, Hope JA expressed the view (pertinent to the present case) that the statement in R v Dunbabin; Ex parte Williams that criticism of a court might constitute contempt if it (at 910):

43. [203]

    His Honour found it difficult to reconcile the outcome in R v Dunbabin; Ex parte Williams (at 910):

44. [204]

    A similar approach can be seen in Gallagher. This case arose out of an earlier case of contempt. In the earlier proceedings, Mr Gallagher, who was the federal secretary of a trade union, and another man were found guilty of contempt of the Federal Court, and fines and a sentence of imprisonment imposed. The Full Court of the Federal Court of Australia allowed an appeal by Mr Gallagher and set aside the sentences. Following delivery of the judgment, the trade union passed a resolution, the first sentence of which read (at 242):

45. [205]

    Mr Gallagher distributed the resolution to the media. He was interviewed by a television reporter, who asked his reaction to the decision of the Full Court. He replied (at 242):

46. [206]

    The High Court upheld the conviction. Gibbs CJ, Mason, Wilson and Brennan JJ said (at 243) (citing Fletcher):

47. [207]

    In Nationwide News Pty Ltd v Wills (1992) 177 CLR 1; [1992] HCA 46 (where the issue was the constitutional validity of a statutory provision that purported to create an offence of using words calculated to bring a member of the Industrial Relations Commission, or the Commission itself, into disrepute) Mason CJ said (at 32):

48. [208]

    What I have written does not purport to be an exhaustive review of the decided cases. Others may be found in the extensive and comprehensive judgment of Hope JA in Mundey. What I have written is intended to provide an overview of the various ways in which the established principles have been applied.

49. [209]

    It can be seen that the courts seek to strike a balance between, on the one hand, protection of the administration of justice in order to preserve public confidence, and, on the other, recognition of the rights of individuals to criticise, even strongly, decisions made by courts and even the courts themselves. What will not be tolerated is the publication of material that tends to undermine confidence in the administration of justice, or is likely to impair a court’s authority (Dixon J in R v Dunbabin; Ex parte Williams).

50. [210]

    Relevant considerations are:

51. [211]

    It is difficult to imagine more trenchant, provocative or insulting language than that employed by the appellant in those of the documents in which he accused McLoughlin DCJ of tampering with a transcript, and the District Court and White J of corruption. If disseminated to the public those accusations could (but for the good sense of the public recognised so long ago in Bell v Stewart) be taken to have jeopardised confidence in the administration of justice in the District Court and the Supreme Court. But that is a salient point. The cases I have reviewed arose out of publications in mass media, either newspapers or television stations with a wide reach. Each of the present publications by the appellant was confined in the scope of its distribution. Leaving aside the letters of 27 August 2010 and 5 October 2010, each of which the primary judge held did not amount to contempt, what is alleged in Count 7 to be contemptuous publication was made in three affidavits, two notices of motion, one letter to the District Court (11 January 2011) and one appearance in the Court of Appeal. The majority were allegations of bias, or of error (“incorrect orders”) either of which may quite legitimately be made. The appellant did not bother to employ the courteous language which is ordinarily expected of such claims, but he was nevertheless entitled to make the claims. The publications concerning White J were even more limited, and, in the case of the first and second, were relatively benign assertions of bias, again an assertion the appellant was entitled to make, particularly in the context of seeking to have proceedings heard by another judge.

52. [212]

    The recipients of the publications were court employees or officers, and the opposing parties. There is no reason to think that any of these was in any way influenced by the appellant’s tirades, as was the case in Bell v Stewart and Fletcher. Rather, the likelihood is that each recipient exercised the good sense attributed to members of the public and discounted or ignored what the appellant said. There is no allegation that any decision made by McLoughlin DCJ or White J was in any way affected by what the appellant published, and it would be preposterous to suggest otherwise. No recipient would have entertained misgivings about the integrity, propriety or impartiality of either McLoughlin DCJ or White J.

53. [213]

    On the application of the considerations set out above, it would be open to reach the conclusion that, notwithstanding the abusive tone of the correspondence, contempt had not been made out.

54. [214]

    But there is, it seems, a further category, or perhaps subcategory, of scandalising contempt. That is contempt committed by “scurrilous abuse”: see Gray and Mundey at 910. An example is to be found in Re Wiseman [1969] NZLR 55. The report is brief, and describes the matter said to constitute contempt as four affidavits filed in the Supreme Court at Auckland and served on the Crown Law Office in the same city, together with a notice of motion filed in the Court of Appeal. The affidavits were said to (at 58):

55. [215]

    He considered that what had been published by Mr Wiseman in his affidavits went far beyond the permissible boundaries. The court therefore found Mr Wiseman to be in contempt.

56. [216]

    That approach was endorsed by this court in Ex parte Attorney-General; Re Goodwin [1969] 2 NSWR 360. In that case the contempt was constituted by a letter written by Mr Goodwin and circulated to 13 registrars of the District Court. He enclosed a letter he had earlier written to the Attorney-General in which he described a judge (who had in earlier proceedings for malicious prosecution found against him) (at 361):

57. [217]

    The court held that the letter sent to the registrars was (at 362):

58. [218]

    And, in the Tasmanian case of Trustrum, referred to above, the contempt was constituted by an affidavit filed in proceedings in which Mr Trustrum was a defendant and contained material critical of a judge and of a master. The affidavit asserted corruption, conspiracy and abuse of judicial office on the part of the master, and bias on the part of the judge.

59. [219]

    Slicer J dismissed the contempt proceedings so far as they alleged contempt relating to the judge, but found Mr Trustrum guilty of contempt in relation to the accusations that the master was guilty of judicial corruption for financial gain.

60. [220]

    One difficulty in the present case is identifying the particular branch of contempt upon which the respondent relied. Did he assert (in the language of Gray) that the communications by the appellant scandalised the judges – that is, were they calculated to bring them into contempt or lower their authority?; or did he assert that they were calculated to obstruct or interfere with the course of justice or the lawful process of the courts?

61. [221]

    There are elements of both to be found in some of the language used. It may be inferred that, by reason of the ferocity of the language, he sought to intimidate the judges in their future conduct of the proceedings in which he was involved. It may readily be inferred that his language and accusations were calculated to bring the judges into contempt and to lower their authority. But, as I have suggested above, the prospect of that being achieved was remote.

62. [222]

    With respect to the complaints about White J, the notice of motion referred to a previous “verbal altercation” as a reason why matters concerning the appellant should not be listed before White J. One of the letters again referred to “run-ins” with White J, apparently for the same purpose, and alleged bias. These, again, were complaints the appellant was entitled to make. The grandiose statements that he (the appellant) would not allow White J to appear before him again were simply absurd and displayed a fundamental misunderstanding of the judicial process. They could have had no adverse impact on the standing of the judge.

63. [223]

    I have come to the conclusion that, in part, the publications by the appellant are contempt within the subcategory of scandalising contempt by scurrilous abuse. In particular, the assertions that McLoughlin DCJ tampered with the transcript of court proceedings, that the District Court was corrupt, and the assertions that White J engaged in corruption do not amount to legitimate criticism of court decisions but are “scurrilous abuse”. Moreover, while it is unlikely that they would have any actual effect of influencing the outcome of proceedings still pending in either court, those accusations were calculated to induce a lack of confidence in the ordered and fearless administration of justice. It is otherwise with respect to the majority of the documents. The bulk of the complaints made by the appellant about McLoughlin DCJ are of bias – or of making “incorrect orders” infelicitously and discourteously expressed, but complaints which may legitimately be made about any judicial officer.

64. [224]

    I have therefore concluded that the convictions in relation to Counts 7 and 11 should be upheld, but in a limited way, confined to the assertions that McLoughlin DCJ tampered with the transcripts, that the District Court was corrupt, and that White J was guilty of corruption. I will consider below the implications of those findings for the purpose of the appeal against sentence.

65. [225]

    For the convenience of the reader, I will set out again the terms of Count 13. It is framed as follows:

66. [226]

    Nine particulars were subscribed to the charge in the FASoC. The essence of the charge, as particularised, is that, after the various costs orders had been made, the appellant structured his own affairs and those of DBMA by draining all accounts other than DBMA’s trust account (which was immune from compulsory acquisition by garnishee order), and used that account as an operating account for himself and DBMA. The particulars in this respect go further than the charge as formulated.

67. [227]

    The evidence upon which the respondent relied to establish the charge is not at all clear. However, he gave some evidence (in affidavit form), referring to cross-examination of the appellant in a proceeding before McLoughlin DCJ and also to bank documents and records (presumably those produced in answer to the subpoenas the subject of Count 6).

68. [228]

    The primary judge identified the evidence in [134] as follows:

69. [229]

    It is a reasonable inference that what motivated the appellant in acting as he did was anticipation that the respondent would seek enforcement of the costs orders by garnishee order, either against financial resources of DBMA or against accounts in his own name.

70. [230]

    Six grounds of appeal were pleaded, of which the fifth and sixth repeated the complaint about reliance on the failure of the appellant to give evidence. Others raised again the issue of the liability for contempt by a person who was not a party to the proceedings, and bound by any order made, and the asserted erroneous failure by the primary judge to identify the purpose for which a relevant order was made in order to ascertain, in turn, the purpose of the appellant in conducting himself (and his affairs and the affairs of DBMA) as he did. Another complaint was of lack of specificity as to the judgments and orders alleged to have been breached by the appellant.

71. [231]

    No written submissions were directed to the last-mentioned ground, and it may be disposed of quickly. Count 13 was not based on alleged disobedience of any order; it was based upon asserted frustration of costs orders made by the court by allegedly evasive conduct on the part of the appellant. The same may be said in response to the first ground, concerning the liability of a third party. The appellant was not, in this instance, charged as a third party; he was charged for the conduct in which he allegedly engaged, and was found to have engaged.

72. [232]

    The written submissions did not directly address the grounds of appeal. Two points only were made. One was that the evidence did not establish that the appellant had knowledge of the various garnishee orders (of which there were many) and that knowledge of the (garnishee) order is necessary before contempt by reason of disobedience of orders can be found. This, again, misunderstands the crux of the charge which, I repeat, was of conduct by the appellant designed to frustrate the costs orders, enforcement of which was sought to be achieved by the use of garnishee orders. That argument is based on a false premise, that it was necessary to prove, in the case of a garnishee order, that the appellant was aware that it had been made. That is incorrect. What had to be established was that the appellant was aware of the costs orders, and this was not (and could not be) contested. I accept that the manner in which the charge is framed is less than pellucidly clear, but its intent is plain enough.

73. [233]

    The second argument was that the central allegation in the count as pleaded was that the appellant structured his financial affairs, and operated his bank accounts so as to avoid enforcement of the costs orders.

74. [234]

    This argument has more merit. Since the allegation is in the nature of a criminal charge, it must be stated with precision. Rather than focus on the manner in which the appellant conducted his own financial affairs, the respondent adduced evidence showing that the appellant conducted the affairs of DBMA so as to avoid the effect of any garnishee order that might be obtained. It is true that some of the particulars asserted conduct by the appellant in relation to his own affairs, but it is difficult to extract this from the evidence adduced.

75. [235]

    In any event, no authority was cited to support the proposition that quarantining funds with the express purpose of avoiding garnishee orders constitutes contempt.

76. [236]

    In my opinion the evidence was insufficient to establish this charge beyond reasonable doubt. I would uphold the appeal in this respect.

77. [237]

    The result is that, in my view, four (Counts 5, 6, 8 and 13) of the eight convictions ought to be set aside, and the appeal allowed to that extent; the appeal should be dismissed in relation to the remaining four convictions (Counts 1, 7, 9 and 11).

78. [238]

    That calls for reconsideration of the sentence imposed. The primary judge imposed an aggregate sentence of 10 months, commencing on the date the appellant was taken into custody (18 December 2015). She specified the sentences of imprisonment that she would have imposed if sentencing for the offences individually. The indicative sentences now relevant were:

79. [239]

    I would not depart from the primary judge’s assessment of the appropriate sentences in relation to Counts 1 and 9. Since I would uphold the convictions in relation to Counts 7 and 11 on a more limited basis than was found by the primary judge, it is necessary to reconsider those sentences.

80. [240]

    The contempt in Count 7, the allegation concerning McLoughlin DCJ and the District Court although serious, was confined in its circulation and would not have been given credence by any recipient. If sentencing in relation to that conviction separately, I would impose a sentence of imprisonment for 3 months. The contempt embodied in Count 11, concerning White J, was of equal seriousness and warrants a similar sentence, of 3 months.

81. [241]

    I would impose an aggregate sentence of imprisonment for 6 months, commencing on 18 December 2015, the day the appellant was taken into custody. Since he has served at least that time, there is no call for any action to be taken in relation to his being again taken into custody.

82. [242]

    Since the parties have had equal success, I would make no order for costs.

83. [243]

    The orders I propose are:

84. [244]

    Since preparing these reasons I have had the advantage of reading in draft the judgments of Payne JA and Emmett AJA. I agree that Order 4 concerning the costs of the trial, ought be made.

85. [245]

    PAYNE JA: I am grateful for the judgment of Simpson JA which I have read in draft. Subject to what appears below, I agree with her Honour, for essentially the reasons she gives, that Counts 5, 6, 8 and 13 should have been dismissed by the primary judge and that the appeal in relation to those counts should be allowed.

86. [246]

    I agree with Simpson JA, again for essentially the reasons her Honour gives, that the convictions in relation to Counts 7 and 11 should stand and the appeal in relation to those counts should be dismissed. In particular, I agree with the limitations upon those counts identified by her Honour, namely that Count 7 be limited to the assertions that McLoughlin DCJ tampered with transcripts and the District Court was corrupt and that Count 11 be limited to the assertion that White J was guilty of corruption.

87. [247]

    I also agree with her Honour that the appeal in relation to Count 9 should be dismissed. The order made by Rein J the subject of this count was addressed to the appellant rather than DB Mahaffy & Associates Pty Ltd and there was evidence that the appellant had sufficient funds to pay the order and that his failure to do so was deliberate.

88. [248]

    The conclusion reached by her Honour in respect of Count 1, however, is one with which I do not agree. My reasons can be briefly explained.

89. [249]

    It will be recalled that Count 1 was in the following form:

90. [250]

    To establish the charge of contempt by failing to comply with the order of the District Court to pay costs of $136,679.46 it must be shown that the conduct of the alleged contemnor was a deliberate breach of that order: Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98: [1986] HCA 46. The standard of proof is beyond reasonable doubt and the prosecutor bears the onus of establishing that the alleged contemnor did something or failed to do something that he could have otherwise done.

91. [251]

    As Simpson JA explains, the weight of authority is in favour of the proposition that, depending on the nature of the order, a non-party director of a company may be in contempt for breaching an order directed at the company of which he or she is a director. Whether the authorities go so far as to provide that an omission by a non-party company director to take steps to cause a company to pay a costs order is not something I need to decide here. I will assume that on the facts of this case, the appellant, although not a party to the relevant proceedings and not the subject of the order, as the sole shareholder and director of DB Mahaffy & Associates Pty Ltd and a person on notice of the order, was bound to take steps, if those steps were able to be taken, to have DB Mahaffy & Associates Pty Ltd comply with the order.

92. [252]

    The relevant issue here is whether, in his capacity as sole director of DB Mahaffy & Associates Pty Ltd, by act or omission, the appellant deliberately caused the company to fail to pay $136,679.46 to Jeffrey Mahaffy pursuant to orders made on 4 September 2009. For present purposes, although no time was fixed for payment by the order of the District Court, I am content to adopt the time for compliance identified by Simpson JA of 30 January 2011.

93. [253]

    In the absence of an express admission or express acknowledgment of facts which demonstrate such deliberate conduct, the conclusions reached by the primary judge had to be arrived at by a process of inference. A feature of drawing inferences as a basis for ultimate fact-finding is that those inferences may be rebutted, or there may be other evidence which qualifies or inhibits the inference-drawing process: see Kazal v Thunder Studios Inc (California) (2017) 350 ALR 216: [2017] FCAFC 111 at [67]. That is especially so when conclusions indispensable to guilt are required to be reached in proceedings with penal consequences, such as in this case.

94. [254]

    An inference about a fact indispensable to a finding of guilt can only be drawn if there is no reasonable explanation consistent with innocence: Shepherd v The Queen (1990) 170 CLR 573 at 580-581; [1990] HCA 56. Whether or not DB Mahaffy & Associates Pty Ltd was at any relevant time able to pay $136,679.46 to Jeffrey Mahaffy was a fact indispensable to a finding of guilt. In those circumstances, once raised on the material, the reasonable possibility that DB Mahaffy & Associates Pty Ltd was unable to pay $136,679.46 to Jeffrey Mahaffy at any relevant time had to be excluded beyond reasonable doubt.

95. [255]

    Of course, an inference may properly be drawn from the evidence in the case, and more safely drawn in the absence of rebutting evidence: see Weissensteiner v The Queen (1993) 178 CLR 217 at 227; [1993] HCA 65; R v Baden-Clay (2016) 258 CLR 308; [2016] HCA 35 at [50]. It does not, however, follow that impecuniosity is a “defence” to a claim that a director of a company deliberately caused the company to fail to pay a costs order. The onus of proving that a director of a company deliberately caused the company to fail to pay a costs order remains on the prosecutor at all times. Weissensteiner and Baden-Clay do not establish that an evidential onus falls upon a director of a company to show the inability of the company to pay a fine or an award of costs. To conclude that in a contempt case such as the present impecuniosity is a defence which must be established by a defendant, even at the level of an evidential onus, is in my view inconsistent with the decision in Azzopardi v The Queen (2001) 205 CLR 50; [2001] HCA 25 at [34].

96. [256]

    In this case, important aspects of the available evidence positively suggested that it was a reasonable possibility that DB Mahaffy & Associates Pty Ltd was at all times unable to pay $136,679.46 to Jeffrey Mahaffy pursuant to orders made on 4 September 2009. If the company was insolvent and unable to pay, it follows that the appellant, by act or omission, was incapable of deliberately causing the company to fail to pay $136,679.46 to Jeffrey Mahaffy pursuant to orders made on 4 September 2009.

97. [257]

    The primary judge inferred that the appellant deliberately caused the company to fail to pay $136,679.46 to Jeffrey Mahaffy pursuant to orders made on 4 September 2009 based principally on five matters:

    1. (1)

       the statutory declaration from the appellant dated 9 April 2008 apparently filed in relation to a security for costs application that he was familiar with the financial status of DB Mahaffy & Associates Pty Ltd and that the company “is able to meet a costs order in the event that it is unsuccessful in this litigation”;

    2. (2)

       a successful garnishee order which recovered $2,300;

    3. (3)

       the successful sale of a property in Narrabri owned by the appellant;

    4. (4)

       the finding that in 2014, DB Mahaffy & Associates Pty Ltd “continues to trade”; and

    5. (5)

       the 13 proceedings, identified as particulars to the count, which were commenced by DB Mahaffy & Associates Pty Ltd to set aside the order for costs which had been made.

98. [258]

    All but the first of those matters are incapable of properly giving rise to an inference in this case that DB Mahaffy & Associates Pty Ltd was able to pay $136,679.46 to Jeffrey Mahaffy at any relevant time.

99. [259]

    The evidence of the successful garnishee order, including that under which $2,300 was recovered, is at best neutral and may tend to establish the insolvency of the company. The fact that after exhaustive attempts involving all major financial institutions yielded only $2,300 tends to suggest that by 30 January 2011 DB Mahaffy & Associates Pty Ltd was unable to pay $136,679.46 to Jeffrey Mahaffy pursuant to the orders made on 4 September 2009. It certainly does not support an inference to the contrary.

100. [260]

     The sale of a property in Narrabri was not relevant to a finding about the ability of DB Mahaffy & Associates Pty Ltd to pay $136,679.46. The evidence was that the property was owned by the appellant, not the company. The fact that a director has assets of his or her own which he or she chooses not to use to pay a company debt is not probative of whether the director deliberately caused the company to fail to pay a costs order.

101. [261]

     The finding that as at the date of making orders DB Mahaffy & Associates Pty Ltd continued to trade was inconsistent with the evidence of an Australian Securities & Investments Commission (ASIC) search, tendered by the respondent, that DB Mahaffy & Associates Pty Ltd had been deregistered in March 2013. Deregistration may perhaps have been the consequence of the sequestration order made in relation to the appellant, its sole director and shareholder, earlier in March 2013. Whilst it is true that there were also other ASIC records in evidence suggesting that the company was registered at the time of the trial, how a company could “continue to trade” without any directors or employees in circumstances where the shares in the company have vested in a trustee in bankruptcy was not explained in the evidence. The “trading” evidence was equivocal at best and did not support the drawing of any inference about solvency.

102. [262]

     The 13 occasions that proceedings were commenced to set aside the orders for costs which had been made is not capable of amounting to evidence that the appellant was in contempt of court in this case. I do not think it is open to conclude that failure to pay a costs order can amount to contempt of court if the only identifiable funds which are said to have been available to pay those costs are used to seek, by appeal and other available process, to set aside the original orders of the court. If, as the respondent submitted, those 13 proceedings were all an abuse of process, each relevant court had ample powers to take action to prevent an abuse of process. There was no finding to which the respondent was able to point made by any of the judges who heard the particularised applications that those applications were an abuse of the processes of the court. Absent extraordinary circumstances, which do not arise in this case, it is not a contempt of court to challenge by appeal or stay application the making of an order by a court. If it were otherwise, all litigants would inevitably face contempt proceedings if they chose unsuccessfully to challenge a court order for the payment of money (and spent money in that challenge) and were subsequently unable to meet that order for the payment of money.

103. [263]

     The only evidence which points in favour of drawing the necessary inference is the statutory declaration from the appellant dated 9 April 2008 that he was familiar with the financial status of DB Mahaffy & Associates Pty Ltd and the company “is able to meet a costs order in the event that it is unsuccessful in this litigation”. If that were the only evidence available there would be much to commend the inference drawn by the primary judge that DB Mahaffy & Associates Pty Ltd was therefore able to pay $136,679.46 to Jeffrey Mahaffy.

104. [264]

     There was, however, a further body of evidence about the solvency of DB Mahaffy & Associates Pty Ltd at the relevant time. This evidence strongly suggested that DB Mahaffy & Associates Pty Ltd was insolvent. At least that evidence raised the reasonable possibility that DB Mahaffy & Associates Pty Ltd was insolvent. In particular, there was evidence comprising almost an entire volume of correspondence containing multiple garnishee notices directed to all of Australia’s major financial institutions together with the responses to those notices all of which, with the exception of one in the amount of $2,300, disclosed no attachable funds. There was also evidence of multiple attempts by the sheriff to levy the property of DB Mahaffy & Associates Pty Ltd. Despite extensive searches by the sheriff’s office, there was no property of DB Mahaffy & Associates Pty Ltd which was able to be levied to meet the costs order.

105. [265]

     There was also evidence that on 9 December 2010 the respondent served a statutory demand on DB Mahaffy and Associates Pty Ltd identifying as the relevant debts judgments of the District Court in September 2009 and April 2010. On 29 June 2011, White J dismissed the originating process filed by DB Mahaffy & Associates Pty Ltd seeking to set aside that statutory demand. Time for compliance with that statutory demand expired on 6 July 2011: DB Mahaffy & Associates Pty Ltd v Mahaffy [2011] NSWSC 901 at [6]. No order was made by the Court of Appeal extending the time for compliance and, as his Honour found, “accordingly the presumption of insolvency has arisen”: s 459C of the Corporations Act 2001 (Cth).

106. [266]

     Further important evidence of the financial position of DB Mahaffy & Associates Pty Ltd was contained in business records tendered by the respondent in his affidavit sworn on 23 August 2009 which provided as follows:

     1. (1)

        as at 23 August 2009, the most recent financial statements and income tax returns of DB Mahaffy & Associates Pty Ltd concerned the 2006 financial year;

     2. (2)

        financial statements for the year ending 30 June 2006 demonstrated that DB Mahaffy & Associates Pty Ltd made a loss of $17,593 for the year ending 30 June 2006;

     3. (3)

        as at 30 June 2006, DB Mahaffy & Associates Pty Ltd had a negative net asset value of $65,911 and shareholders’ funds for the company showed an accumulated loss amount of $65,911;

     4. (4)

        DB Mahaffy & Associates Pty Ltd Company Income Tax Return for the year ending 30 June 2006 confirmed the results as reported on the financial statements; and

     5. (5)

        in a letter dated 19 May 2009, Martin Legal, former solicitors appearing for DB Mahaffy & Associates Pty Limited stated “[DB Mahaffy & Associates Pty Ltd] has not paid his legal fees to us for past work and, as a result, we have served a Notice of Intention to File Notice of Ceasing to Act upon the Plaintiff”. Mr Martin further stated, “Because of the quantum of the fees involved and the period, over which payment has been promised, we are unwilling to perform further work, whilst past work remains unpaid”.

107. [267]

     As the respondent, himself an accountant who had at one time been employed by DB Mahaffy & Associates Pty Ltd, stated in his affidavit sworn on 23 August 2009:

108. [268]

     This evidence of insolvency both before and after the relevant date, at the very least, gives rise to an available inference consistent with innocence. Having regard to all of the evidence, and paying due regard to the failure of the appellant to give evidence, I would not infer that DB Mahaffy & Associates Pty Ltd was able to pay $136,679.46, or any part of that amount, to Jeffrey Mahaffy at any relevant time.

109. [269]

     The inference I would draw is that the company was at all relevant times insolvent. In any event, there is on the evidence an available inference consistent with innocence. The ability of DB Mahaffy & Associates Pty Ltd to pay $136,679.46, or any part of that amount, on or after 30 January 2011 was a conclusion indispensable to the appellant’s guilt. That conclusion can only be drawn if there is no reasonable inference available consistent with innocence. I am satisfied that there was an inference available consistent with innocence. It follows that I am not satisfied that the appellant could properly have been found guilty of count 1.

110. [270]

     The appeal so far as it relates to count 1 should be allowed.

Sentence

1. [271]

   Given the conclusion I have reached it is necessary to resentence the appellant. Simpson JA has set out the indicative sentences identified by the primary judge.

2. [272]

   I agree with Simpson JA, for the reasons that her Honour gives, that the appropriate indicative sentences are 2 months for Count 9 and 3 months for each of Counts 7 and 11. A modest degree of accumulation between those indicative sentences is appropriate. I would impose an aggregate sentence of imprisonment of 4 months, commencing on 18 December 2015.

3. [273]

   As the appellant has already served a period of imprisonment in excess of 4 months, there is no need for any action to be taken in relation to his again being taken into custody.

Costs of the trial and the appeal

1. [274]

   As the primary judge correctly observed, in Hinch v Attorney General for the State of Victoria (1987) 164 CLR 15 at 88-89; [1987] HCA 56, the High Court concluded that contempt proceedings are conducted in civil jurisdiction and attract the rule that costs follow the event. There is no rule of law or established practice requiring the making of a costs order on an indemnity basis in contempt proceedings: McIntyre v Perkes (1988) 15 NSWLR 417 at 428 (Samuels JA (with whom Mahoney JA agreed)).

2. [275]

   Section 98 of the Civil Procedure Act 2005 (NSW) confers on the court a wide discretion with respect to costs. Under r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) the “general rule” is that the court is to order that costs follow the event. The “event” may be characterised in more than one way. Generally the "event" refers to the event of the claim or counterclaim, as the case may be, and may be understood as referring to the practical result of a particular claim: Doppstadt Australia Pty Ltd v Lovick & Sons Developments Pty Ltd (No 2) [2014] NSWCA 219 at [15] (Ward, Emmett and Gleeson JJA). Where there has been a mixed outcome in the proceedings, and it is appropriate to entertain the process of apportioning costs as between different issues in the proceedings, in general such an exercise will be carried out on a relatively broad brush basis, and largely as a matter of impression and evaluation by the court: Doppstadt at [19]; James v Surf Road Nominees Pty Ltd [No 2] [2005] NSWCA 296 at [36]; Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20 at 22.

3. [276]

   This is a difficult case to address the question of costs. The appellant was represented by counsel on the appeal, where he was successful in having five of the eight counts against him dismissed. The measure of success he enjoyed on the appeal would in the ordinary course entitle him to an award of a percentage of his costs.

4. [277]

   The primary judge made an award of costs of the trial in the respondent’s favour. The respondent was self-represented at the trial (and in this court). Given the large number of counts where I have concluded he should have failed, that order should be set aside and the discretion exercised afresh. The respondent ultimately succeeded on only a small number of the numerous charges he preferred. In the ordinary course, however, he would nevertheless be entitled to a percentage of his costs of the trial.

5. [278]

   A particular feature of this litigation is that the litigation between the Mahaffy brothers has consumed each of them for over a decade and has led, amongst other things, to the bankruptcy and imprisonment of the appellant. The proceedings have also taken an obvious financial, psychological and emotional toll on the respondent. A further peculiar feature of this litigation is that the subject matter of these proceedings encompassed the respondent’s almost wholly unsuccessful attempts to have the appellant found guilty of contempt for the non-payment of various costs orders in earlier litigation. It is important, if possible, to bring this internecine litigation to an end.

6. [279]

   In these very particular circumstances, rather than make orders for costs in favour of the appellant in relation to the appeal and in favour of the respondent in relation to the trial, I have concluded that the appropriate orders are that there be no order as to costs of the trial or the appeal. That conclusion gives effect to my broadbrush impression and evaluation that the entitlement of the appellant to costs of his successful appeal would roughly be cancelled out by the respondent’s entitlement to costs of the trial.

7. [280]

   The order I propose involves taking a high-level view of the relative successes of each party in the trial and on the appeal. To make competing costs orders, which will almost certainly be contested in a lengthy and costly assessment, would not be consistent with the overarching purpose of quelling litigious disputes as quickly, justly and cheaply as possible.

8. [281]

   Before leaving this case I should also record that I am grateful to Dr Kell SC and those who assisted him in appearing as an amicus curiae in this matter. Without their assistance what was already a very difficult matter would have become unmanageable.

Orders

1. [282]

   I propose the following orders:

   1. (1)

      Appeal against conviction allowed in part;

   2. (2)

      Convictions in relation to counts 1,5,6,8 and 13 are set aside;

   3. (3)

      Appeal against sentence allowed. Set aside the sentence imposed by the primary judge and in lieu thereof:

   4. (4)

      Set aside the costs order made by the primary judge for the costs of the trial and in lieu thereof order:

   5. (5)

      Each party pay their own costs of the appeal.

2. [283]

   EMMETT AJA: This appeal is concerned with charges of contempt brought against the appellant, Mr David Mahaffy (David), by his brother, Mr Jeffrey Mahaffy (Jeffrey). The charges arose out of proceedings brought against Jeffrey in the District Court at Tamworth by David and D B Mahaffy & Associates Pty Ltd (the Company). David is the principal and sole director and shareholder of the Company. The claims were finally pressed only by the Company and the proceedings were dismissed. However, Jeffrey brought a cross-claim against the Company and David, and an order was made in his favour in the cross-claim.

3. [284]

   In addition, various costs orders were made in favour of Jeffrey against David and the Company both in the proceedings in the District Court and in related proceedings brought in the Common Law Division and in the Court of Appeal. Specifically, on 4 September 2009 McLoughlin DCJ ordered the Company to pay the sum of $136,679.46 to Jeffrey. No stay was ever granted in relation to that order and there was therefore no impediment for Jeffrey to take steps to enforce the orders made by McLoughlin DCJ. Most of the contempt charges arise out of the failure of the Company to pay that amount and other amounts that it was ordered to pay. In addition, there were two charges relating to allegations by David of corruption and improper conduct on the part of judicial officers dealing with proceedings relating to the costs orders.

4. [285]

   Ultimately, some 13 separate charges by Jeffrey against David were heard by a judge of the Common Law Division (the primary judge). On 16 February 2015, the primary judge published reasons for her Honour’s conclusions that the contempt alleged in eight of the charges had been proved beyond reasonable doubt. Her Honour dismissed the other five charges. On 18 December 2015, her Honour formally found David guilty of the contempt alleged in eight charges and sentenced him to a total term of imprisonment of 10 months, to commence from the date of his arrest. David was arrested and served part of the sentence.

5. [286]

   However, David appealed to this court from the convictions and against the sentences imposed by the primary judge. On 28 July 2016, another judge sitting in the Common Law Division ordered his release, pending the hearing of his appeal.

6. [287]

   The question in the appeal is whether the convictions should stand in relation to eight charges. I have had the advantage of reading in draft form the proposed reasons of Simpson JA for upholding the appeal in relation to four of the charges and for dismissing the appeal in relation to three of the charges. I have also had the advantage of reading in draft form the proposed reasons of Payne JA for upholding the appeal in relation to one of the charges (Charge 1), in respect of which Simpson JA would dismiss the appeal.

7. [288]

   I agree with Simpson JA’s reasons and conclusions in relation to the four charges where her Honour would uphold the appeal and three of the charges where her Honour would dismiss the appeal. However, I do not agree with the conclusion of Simpson JA that the appeal should be dismissed in relation to Charge 1. I agree with Payne JA, for the reasons proposed by his Honour, that the appeal should be upheld in relation to Charge 1. I wish to make some further observations in relation to Charge 1.

8. [289]

   Charge 1 was that David committed contempt by failing to have the Company pay to Jeffrey the sum of $136,679.46 ordered by McLoughlin DCJ on 4 September 2009. All of the particulars of conduct said to constitute that contempt consisted the filing of applications either to the District Court or the Equity Division or the Court of Appeal seeking relief in relation to that order. It may well be that most, if not all, of those applications were vexatious and had little prospect of success. However, it is noteworthy that each of the steps was taken in accordance with the relevant rules. There was no flouting of the law, whether or not the subject of the applications was to frustrate the enforcement of the order made by McLoughlin DCJ.

9. [290]

   Having regard to the conclusion that I have reached in agreeing with the reasons of Payne JA for upholding the appeal in relation to Charge 1, it is not necessary to decide other grounds relied upon by David in relation to Charge 1. However, it should not be thought that, by not addressing those grounds, I accept the correctness of the position adopted by the primary judge and Simpson JA.

10. [291]

    Clearly enough, persons who, although not personally bound by a court order, procure those who are bound by it to contravene it or otherwise thwart it, may be directly liable for contempt in obstructing the course of justice. [1] Further, where a company is ordered not to do certain acts and a director of a company who is aware of the order wilfully causes the company to do the acts, the director himself may be guilty of contempt. [2] However, where an order is made against a company requiring the company to take some positive step, such as the payment of a sum of money, the position may be different.

11. [292]

    There is a distinction between the case where the director of a company that could comply with an order to make a payment takes steps to ensure that the company does not or cannot comply, and the case where the director simply fails to take steps to ensure or procure that the company complies with the order. In the present case, as Payne JA has concluded, it is by no means clear that the Company could have complied with the order made by McLoughlin DCJ. That is the basis upon which Charge 1 has not been made out. It is inappropriate, therefore, to decide whether, had the Company been able to comply with the order, David would have been guilty of contempt in circumstances where he simply failed to cause the Company to make the payment. That question is for another case.

12. [293]

    I agree with Payne JA, for the reasons proposed by his Honour, that there should be no order as to the costs before the primary judge or in this Court. I agree with the orders proposed by Payne JA for disposition of the appeal and the aggregate sentence that his Honour imposes.