Queensland Judgments
Authorised Reports & Unreported Judgments
  • sclq logo
  1. Caselaw
  2. QSC
  3. 2006
  4. City Hall Albury Wodonga Pty Ltd v Chicago Investments Pty Ltd - [2006] QSC 31

Authorised Reports & Unreported Judgments
Exit Distraction Free Reading Mode
  • Unreported Judgment

City Hall Albury Wodonga Pty Ltd v Chicago Investments Pty Ltd[2006] QSC 31

City Hall Albury Wodonga Pty Ltd v Chicago Investments Pty Ltd[2006] QSC 31

 

SUPREME COURT OF QUEENSLAND

 

CITATION:

City Hall Albury Wodonga Pty Ltd & Ors v Chicago Investments Pty Ltd & Ors  [2006] QSC  031

PARTIES:

CITY HALL ALBURY WODONGA PTY LTD (AS TRUSTEE) (ACN 102 577 524)
(first plaintiff)
and
MALCOLM CHARLES RAABE and ANN ELIZABETH RAABE
(second plaintiffs)
and
LEONARD PROPERTIES PTY LTD (ACN 075 086 583)
(third plaintiff)
and
PETER PIRKOLA and AINO IDA PIRKOLA
(fourth plaintiffs)
and
RODNEY ALLAN KEOGH and JOCELYN ANNETTE KEOGH
(fifth plaintiffs)
v
CHICAGO INVESTMENTS PTY LTD
(ACN 097 159 549)
(first defendant)
and
GREGORY JAMES DAVIS and DEBORAH SUSAN DAVIS
(second defendants)
and
STIRLINGS PTY LTD (ACN 003 163 246)
(third defendant)
and
RAD SREDOJEVIC
(fourth defendant)

FILE NO:

S4161 of 2003

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court of Queensland

DELIVERED ON:

2 March 2006

DELIVERED AT:

Brisbane

HEARING DATE:

23 November, 8 December 2005

JUDGE:

Atkinson J

ORDER:

  1. The second defendants Gregory James Davis and Deborah Susan Davis have committed contempt of court in that they as the second defendants and as the only directors of the first defendant gave, and cause the first defendant to give, undertakings to the court in the following terms “that they will not remove any asserts from Australia” as recorded in the order of Fryberg J made on 25 March 2004 and thereafter breached and caused the first defendant to breach that undertaking.
  2. That Gregory James Davis and Deborah Susan Davis have committed contempt of court in that each gave an undertaking to the court in the following terms “that they will not remove the proceeds of sale of the second defendants property at 44 Berry Dairy Road Parkhurst Rockhampton being lot 1 of RP 617171 Parish of Fitzroy from Queensland without first giving the plaintiffs’ solicitors 7 business days notice of their intention to do so” as recorded in the order of Fryberg J made on 25 March 2004 and thereafter breached that undertaking.
  3. That the second defendants Gregory James Davis and Deborah Susan Davis have committed contempt of court on the grounds that both in their capacity of directors of the first defendant and as the second defendants they breached and they caused the first defendant to breach, the duty of disclosure in rule 211 of the UCPR by falsely uttering and falsely disclosing that the documents in their lists of disclosed documents were created by the authors noted in the lists of documents when in fact those documents were not created by those authors, but were created by one or other of the second defendants so as to pervert the course of justice.
  4. Gregory James Davis is ordered to serve four months’ imprisonment.
  5. Deborah Susan Davis is ordered to serve two months’ imprisonment.
  6. The second defendants are ordered to pay the costs to the plaintiffs of and incidental to the application on an indemnity basis.

CATCHWORDS:

PROCEDURE  –  CONTEMPT  –  DISOBEDIENCE OF ORDERS OF COURT   –  BREACH OF UNDERTAKINGS TO COURT  –  where plaintiffs bought an application that the second defendants be cited for contempt of court for breach of their undertakings to the court –  where the second defendants admitted some of the breaches and denied others – whether the second defendants removed assets from the jurisdiction in breach of the undertakings – penalty for contempt of court.

PROCEDURE – CONTEMPT – DISOBENDIENCE OF ORDERS OF COURT – RULES OF COURT – where the plaintiffs allege that the second defendants created false documents which were disclosed as if they were genuine – whether contempt of court by breaching an implied undertaking not to disclose false documents – whether the actions of the second had the capacity to pervert the course of justice.

Uniform Civil Procedure Rules rr 925, 926, 917, 227, 211, 930, 931

ASIC v First State Home Loans Pty Ltd [2002] QSC 55 applied

Australasian Meat Industry Employees’ Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 cited

Bakir v Doueihi [2001] QSC 414 cited

Davis’s Case (1461) 2 Dyer 188; 73 ER 415 cited

Evenco P/L v Aust Bldg Cons Employees & Builders Labourers Federation (Qld Branch) & Ors [2000] QCA 108, CA NO 3536 of 1999 & 3610 of 1999, 14 April 2000

Harman v Secretary of State for the Home Department, [1983] 1 AC 280 discussed

Harman v United Kingdom (1985) 7 EHRR 146 cited

Hinch v Attorney-General (Vict) (1987) 164 CLR 15 discussed

Jennison v Baker [1972] 2 QB 52 at 61 citied

Madeira v Roggette Pty Ltd [1990] 2 Qd R 357 cited

Phonographic Performance Ltd v Amusement Caterers (Peckham) Ltd (1964) Ch 195 cited

Stewart v Gymboree Pty Ltd [2001] QCA 307 cited

Witham v Holloway (1995) 183 CLR 525 discussed

COUNSEL:

R Lilley for the plaintiffs/applicants

R Bain QC for the defendants/respondents

SOLICITORS:

Hemming and Hart for the plaintiffs/applicants

Gilshenan and Luton for the defendants/respondents

  1. The plaintiffs commenced contempt proceedings against the second defendants, Gregory James Davis and Deborah Susan Davis, in respect of three different types of alleged breaches. The first concerned undertakings given to the court on 25 March 2004 by the first defendant, Chicago Investments Pty Ltd (“Chicago Investments”). The plaintiffs alleged that the second defendants caused the first defendant to give the undertakings and subsequently themselves breached and caused the first defendant to breach those undertakings. The second concerned undertakings given to the court by the second defendants on 25 March 2004 which they are alleged to have breached. The third concerned documents disclosed by the first and second defendants in the principal litigation which were, it was alleged, created by one or other of the second defendants so as to pervert the course of justice. The second defendants admitted some of the breaches and strenuously disputed others.

Civil contempt

  1. As I held in Bakir v Doueihi,[1] the power of courts to fine or imprison for contempt of court has long been part of the coercive power of courts.  In its original form, the coercive power of contempt was used to ensure order in the court and matters immediately affecting its business.  So it was that as early as the 13th and 14th century,[2] it was held to be contempt of court to assault a judge,[3] a juror,[4] a witness,[5] an opposing party,[6] a litigant,[7] or an officer of the court.[8]  It was also a contempt to use words, for example, to insult a judge in open court.[9]  Fine and imprisonment were early common law remedies for such contempt of court.
  1. In the Courts of Chancery, two types of contempts were commonly recognised. These included criminal contempt and the type of civil contempt which is in issue in this case. This type of civil contempt concerns the power which was vested in the Court of Chancery to deal with a party’s contempt in breaching undertakings given by that party.[10]  A civil contempt of the type with which the court is concerned in this instance involves disobedience of a court order or an express or implied undertaking given by a person involved in litigation.
  1. An application for a person to be dealt with for civil contempt has two main aspects. Firstly, it is for the benefit of the party who has the benefit of a court order which has been breached. Secondly, however, it is designed to punish disobedience of orders of the court. There is both a private and a public interest in compliance with court orders. As Salmon LJ said in Jennison v Baker:[11]

“The public at large, no less than the individual litigant, have an interest, and a very real interest, in justice being effectively administered.”

  1. Edmund-Davies LJ[12] quoted with approval from the judgment of Cross J in Phonographic Performance Ltd v Amusement Caterers (Peckham) Ltd:[13]

“Where there has been wilful disobedience to an order of the court and a measure of contumacy on the part of the defendants, then civil contempt, what is called ‘contempt of procedure’, bears a two fold character, implying as between the parties to proceedings merely a right to exercise and a liability to submit to a form of civil execution, but as between the party in default and the state, a penal disciplinary jurisdiction to be exercised by the court in the public interest.”

  1. As the High Court held in Witham v Holloway,[14] proceedings for breach of an order or undertaking have the effect of vindicating judicial authority as well as a remedial or coercive effect.
  1. These two aspects of a civil contempt constituted by the failure to abide by an order of a court or an undertaking given to a court, have an inevitable impact on the procedure and standard of proof to be followed in such a case. In Witham v Holloway,[15] the court held that the differences between civil and criminal contempt are illusory.  The fact that the usual outcome of successful proceedings is punishment, makes it clear, as Deane J said in Hinch v Attorney-General (Vict),[16] that all proceedings for contempt “must realistically be seen as criminal in nature”.  The consequence is that all charges of contempt must be proved beyond reasonable doubt. 
  1. The breach of an undertaking will not constitute contempt unless it is wilful and not casual, accidental or unintentional.[17]
  1. There are, nevertheless, procedural differences between criminal and civil contempts. In particular, there is no trial by jury and an application for punishment for contempt is brought in the civil jurisdiction of the court.

Contemporary practice in Queensland

  1. The procedure for bringing an application for punishment for contempt of court in Queensland is found in Chapter 20, Part 7, Division 3 of the Uniform Civil Procedure Rules (UCPR).  Rule 925 provides that Division 3 applies to specified contempts.  Subparagraph (a) of r 925 says that this Division applies to “contempt constituted by failure to comply with an order of the court or an undertaking given to the court”.
  1. Rule 926 of the UCPR specifies the procedure that must be followed by a person applying for punishment of a contempt. It provides:

“(1)A person applying for punishment of a contempt must file an application specifying the alleged contempt.

  1. The application may be filed in the proceeding in which the contempt was committed or to start a new proceeding.
  2. The application and any affidavit in support of it must be served on the respondent personally.
  3. An affidavit in support of or opposing the application must not contain evidence which the person making it could not give if giving evidence orally.”
  1. This application was filed in the proceeding in which it was alleged the contempt was committed.
  1. The enforcement of undertakings, other than for the payment of money, is covered by r 900 of the UCPR. It provides:
  1. An undertaking, other than for the payment of money, may be enforced in one or more of the following ways -
  1. punishment for contempt of the person liable under the undertaking;
  2. seizing property of the person liable under the undertaking under rule 917;
  3. if the person liable under the undertaking is a corporation, without limiting paragraphs (a) and (b), either or both of the following –
  1. punishment for contempt of any officer of the corporation;
  1. seizing property of any officer of the corporation under rule 917.
  1. An undertaking for the payment of money may be enforced as if it were a money order.
  1. If a party is in breach of an undertaking, another party may apply for compensation to the court in the proceeding in which the undertaking was given.
  1. If the court decides that a party is in breach of an undertaking and that another party has sustained a loss because of the party in breach the party in breach should pay the other party compensation, the court may give judgment against the party who is in breach for the amount the court decides should be paid.

Obligations with regard to disclosure

  1. A party to a proceeding has an obligation or duty to disclose to the other parties, in accordance with r 211 of the UCPR, each document in the possession or under the control of the party which is directly relevant to an allegation in issue in the pleadings. If a party does not disclose a document in accordance with the duty found in r 211 then the consequences set out in r 225 may flow:

“Consequences of nondisclosure

225(1)If a party does not disclose a document under this part, the party –

(a)must not tender the document, or adduce evidence of its contents, at the trial without the court’s leave; and

(b)is liable to contempt for not disclosing the document; and

(c)may be ordered to pay the costs or a part of the costs of the proceeding.

(2)If a document is not disclosed to a party under this part, the party may apply on notice to the court for –

(a)an order staying or dismissing all or part of the proceedings; or

(b)a judgment or other order against the party required to disclose the document; or

(c)an order that the document be disclosed in the way and within the time stated in the order.

(3)The court may, in an order under subrule (2)(c), specify consequences for failing to comply with the order.” (emphasis added)

  1. Rule 227(2) of the UCPR provides that a disclosed document that is tendered at trial is admissible in evidence against the disclosing party as relevant and “as being what it purports to be.” This last phrase points to one of the matters that is at the heart of disclosure. The obligation to disclose necessarily carries with it the implied undertaking not to disclose documents which have been created by that party to look like they are genuine documents when they are not. Breach of such an undertaking strikes at the heart of the process of disclosure which is meant to ensure that each party is fully informed of the strengths and weaknesses of the case against them. If a party were to deliberately falsify documents and then disclose them as if they were genuine, it would be a very serious breach of the implied undertaking.
  1. A breach of an implied undertaking given on disclosure can be, and has been, dealt with by the courts as a matter of utmost gravity. In Harman v Secretary of State for the Home Department,[18] the House of Lords held that it was in contempt of court for a party or that party’s lawyer to publish or disclose the contents of documents disclosed in litigation, even if the documents had been read in open court.  This was because it was in breach of the implied undertaking given by all parties to keep disclosed documents confidential and use them only for the purposes of the litigation.  That rule was rightly criticised as too wide in the dissenting judgment of Lord Scarman and the European Commission of Human Rights[19] considered that the application raised “important and complex issues”.  The rule was subsequently amended.[20]  Nevertheless it points to the value courts place on full and frank disclosure, a process that is fundamentally undermined if a party were to create documents which purport to be documents of third parties in order to mislead the other parties to the litigation and in turn to mislead the court.  Such actions of necessity have the capacity to pervert the course of justice. 

Litigation in which this contempt application was brought

  1. The principal litigation involved a dispute between the parties to a property swap transaction. The first defendant operated a business, being a restaurant and reception centre, on leasehold premises in Albury/Wodonga (“the Albury/Wodonga business”). Its sole directors and shareholders were the second defendants. There are other defendants in the principal litigation but they were not parties in the present application for contempt. The first and second defendants (hereinafter collectively referred to as the defendants) swapped the Albury/Wodonga business for various farming and residential properties in Queensland owned by the second plaintiffs, Malcolm Charles Raabe and Ann Elizabeth Raabe, the third and fourth plaintiffs, Leonard Properties Pty Ltd (“Leonard Properties”) and Peter Pirkola and Aino Ida Pirkola, and the fifth plaintiffs, Rodney Allan Keogh and Jocelyn Annette Keogh. The second to fifth plaintiffs formed a company, City Hall Albury Wodonga Pty Ltd (“City Hall”), the first plaintiff, to undertake the business formerly operated by the defendants.
  1. Litigation commenced in this court on 13 May 2003 with regard to disputes that arose between the parties. The plaintiffs alleged, inter alia, that the defendants had engaged in misleading and deceptive conduct in the sale of the business and the second plaintiffs alleged that there was mismanagement of and damage to their rural property, “Lochan Ora”, whilst it was under the control of the defendants.  The parties retook possession of the properties which they had owned prior to the property swap transaction but the litigation remained on foot regarding damages. 
  1. In the course of the litigation the plaintiffs applied for mareva orders pursuant to r 260 of the UCPR to prevent removal of assets from Australia by the defendants. On 8 March 2004, an application was filed seeking, inter alia, an order:

“That until trial or earlier order the defendants by themselves their servants or agents be restrained from removing their assets from Australia or otherwise (save for items of clothing, personal effects and the use of motor vehicles) in any way whatsoever without first securing to the satisfaction of the Registrar of this Court the sum of $700,000.00 pending final judgment in these proceedings, such sum is to be paid as ordered by the trial judge.”

Various monies were to be excluded from the operation of the proposed orders to cover legal fees and living expenses.

  1. Upon receiving notice of the intention to apply for such orders, the defendants’ solicitors wrote to the plaintiffs’ solicitors saying that the defendants had no intention of leaving Queensland or of transferring any of their assets out of the jurisdiction of the Queensland Supreme Court. Those assertions were made on instructions received from Gregory Davis. It appears that the application for mareva orders was prompted by the defendants’ entering into contracts to sell various assets. They were both born in New Zealand but have lived in Australia since 1998. They were not at that time Australian citizens. Mr and Mrs Davis became Australian citizens on 10 November 2004.
  1. On 25 March 2004, the defendants gave undertakings to the court:

“that until trial or further earlier order:

  1. that they will not remove any assets from Australia;
  1. that they will not remove the proceeds of sale of the second defendant’s property at 44 Berry Dairy Road Parkhurst Rockhampton being Lot 1 on RP 617171 Parish of Fitzroy [“the Rockhampton property”] from Queensland without first giving the plaintiff’s solicitors seven business days prior written notice of their intention to do so.”
  1. Upon those undertakings, the application for mareva orders was adjourned and various directions were given in the proceedings. The undertakings were recorded in an order made by Justice Fryberg.
  1. The Rockhampton property had been purchased by the second defendants on 14 February 2003 for $565,000, of which $395,000 was provided by way of a secured loan from the Westpac Bank. It was sold for the sum of $700,000 with settlement on 5 May 2004. $391,622.01 was used to pay out the mortgage to the Westpac Bank and $287,773.41 was paid to the second defendants. It was deposited into their joint bank account with the National Australia Bank in Rockhampton (BSB no 084 901; Account no 45-996-6749) (“the Rockhampton NAB account”) on 5 May 2004.
  1. On 5 April 2004, the first defendant completed the sale of the Albury/Wodonga business after going back into possession of it. $271,170.56 was paid from the final proceeds of that sale into the account of Mr and Mrs Davis at the Westpac Bank branch at Albury (“the Albury Westpac account”) on 7 April 2004.
  1. On 13 April 2004, by consent the court ordered the second plaintiffs to pay into court the sum of $250,000 in exchange for the withdrawal of a caveat by the first defendant over property owned by the second plaintiffs.
  1. The defendants applied to the court on 1 October 2004 to have the monies that had been paid into court plus accretions paid to them. On 28 October 2004, Justice Helman of this court made an order that the Registrar pay the funds paid into court pursuant to the order dated 13 April 2004 with accretions if any to the first defendant. That order was made upon the undertaking of the second defendants by their counsel “until further order that, in the event that the plaintiffs obtain judgment against the first defendant, the second defendants will pay to the first defendant an amount equivalent to the amount of funds paid out of court.” Pursuant to the court’s order, $256,587.84 was paid by the Registrar to the second defendants’ solicitors on 8 November 2004.
  1. In support of the application to have the moneys paid out of court, Mr Davis swore an affidavit which was filed on 7 October 2004 saying that he and Mrs Davis were the persons entitled to possession of the money presently held by the court. He swore that they wished to use the money “to purchase a home in the Brisbane area” to live in with their daughter and Mrs Davis’s parents. He swore that he and his wife had filed applications for Australian citizenship which had been approved although they had not yet made a pledge of commitment at a citizenship ceremony. He made reference to Mrs Davis’s parents. He said that Mrs Davis’s parents, Robert and Annie Olive Cairns, resided with him and his wife and had done so for more than five years. He swore that Mr and Mrs Cairns had been living in Australia for approximately 15 years and had become Australian citizens. He said that he had a sister living in Australia and a brother in New Zealand. Mr Davis reiterated his preparedness to abide by their “earlier undertaking not to remove any assets from Queensland.”
  1. In an affidavit filed on 7 October 2004, Mr Davis offered the undertaking on behalf of himself and Mrs Davis which was subsequently reflected in the order made by the court on 28 October 2004.
  1. From 28 October 2004, the defendants were bound by three undertakings:
  1. not to remove any assets from Australia;
  1. not to remove the proceeds of sale of the Rockhampton property from Queensland without notice to the plaintiffs’ solicitors; and
  1. if the plaintiffs obtained judgment against the first defendant, the second defendants would pay to the first defendant an amount equal to the sum of money paid out of court.

None of the undertakings was ever dissolved or varied.  No notice was ever given to the plaintiffs’ solicitors by the defendants of any intention to move any assets, whether proceeds of sale of the Rockhampton property or otherwise, from Queensland.  Far from not understanding the width of the orders, Mr Davis understood that he had undertaken not to remove any assets from Queensland.  In fact the undertakings were more limited than that.  It is the precise terms of the undertakings and whether they have been breached which is the subject of this application.  The undertakings were offered by the second defendants either to avoid orders being made against them or to have moneys paid out of court to them.  The undertakings were therefore given to gain benefit and avoid detriment.  They were effective in achieving that purpose.

  1. On 18 February 2005, the defendants filed affidavits sworn on 16 February 2005 by Mr Davis as to the first and second defendants’ assets and liabilities. These affidavits were filed as a result of an agreement between the parties after a hearing before Justice Byrne on 9 February 2005 of an urgent application by the plaintiffs for mareva orders. The plaintiffs’ solicitors had written to the defendants’ solicitors on 4 January 2005 referring to the undertakings given by the defendants, asking for confirmation that Mr and Mrs Davis remained in Australia and asking for evidence as to the assets of the defendants within Australia. Mr Davis swore that the first defendant had no assets. He said that he and his wife held two joint bank accounts. There was $2,153.23 in the Rockhampton NAB account. It will be recalled that $287,773.41 had been paid into this account on 5 May 2004 on the sale of the second defendants’ Rockhampton property and that this was the money that Mr and Mrs Davis had undertaken not to move out of Queensland without notice. Mr Davis said that there was $24,812.85 in a Westpac Bank account in Sydney. It will also be recalled that $271,170.56 had been paid into the second defendants’ Albury Westpac account on 7 April 2004 on the sale of the Albury/Wodonga business. In addition, Mr Davis held $236,483.88 in a margin lending account with BT Financial Group Ltd (“BT”), DAVIG 33298-8 (“Mr Davis’s BT account”). He swore that they had no other bank accounts.
  1. Mr Davis said that he and his wife were owed $279,676 by the Davis Family Trust. He listed the shares he owned and various household items. Those shares were ones that had been held since before the defendants purchased the Albury/Wodonga business. He did not refer to having any creditors. He said he had no direct or indirect interest in any real property in Queensland or elsewhere. This was significant in light of the application the defendants had successfully made to the court for payment out of court of moneys so that Mr and Mrs Davis could purchase a house to live in.
  1. During the hearing of the contempt application, evidence was produced by the applicants showing that the second defendants’ Rockhampton NAB account had a number of significant transactions in the weeks leading up to 16 February 2005. On 13 January 2005, the balance in the account was $5,532.54. On 14 January 2005, $200,000 was transferred from Mr Davis’s BT account to the Rockhampton NAB account and on 20 January 2005, a further $150,000 was transferred from Mr Davis’s BT account to the Rockhampton NAB account. On 2 February 2005, $100,000 was withdrawn from the Rockhampton NAB account and the same amount was withdrawn by cheque on 7 February 2005. On 9 February 2005, amounts of $10,000 and $1,000 were withdrawn in cash and on 10 February $90,000 was withdrawn by cash cheque. The balance after these withdrawals was $2,303.23 and on 16 February, the balance was, as Mr Davis deposed, $2,153.23. In February 2005, $301,000 was withdrawn in cash from the second defendants’ Rockhampton NAB account. All of that occurred after the plaintiffs’ solicitors asked for evidence of the defendants’ assets. Mr Davis did not disclose these recent transactions nor the cash proceeds from those transactions in his affidavit as to his assets and liabilities filed on 18 February 2005.
  1. Mrs Davis also swore an affidavit as to her assets and liabilities which was filed on 18 February 2005. She said that in addition to the joint bank accounts she held with her husband which he detailed in his affidavit, she had $265,346.18 in a BT margin lending account DAVID 35511-9 (“Mrs Davis’s BT account”). She did not disclose any other assets or liabilities except those referred to by Mr Davis apart from a 2001 Ford motor vehicle. She did not refer to the $301,000 withdrawn in cash from the Rockhampton NAB account in the preceding fortnight.
  1. On 22 February 2005, Justice Holmes made the following orders against the second defendants:

“1.That the second defendants, Gregory James Davis and Deborah Susan Davis, and each of them be restrained until further order from, whether by themselves or by their servants or agents, removing any monies or other assets from the margin lending facility held by the second defendant, Deborah Susan Davis, with BT Financial Group (the investment management arm of Westpac Banking Group) the details of which are account no. DAVID 35511-9 with BT Financial Group Pty Ltd, Margin Lending Department, 2 Chifley Square, Sydney, New South Wales and from the margin lending facility held by the second defendant, Gregory James Davis, with BT Financial Group (the investment management arm of Westpac Banking Group) the details of which are account no. DAVIG 33298-8 with BT Financial Group Pty Ltd, Margin Lending Department, 2 Chifley Square, Sydney, New South Wales.

  1. Notwithstanding the preceding paragraph of these orders, the second defendants, Gregory James Davis and Deborah Susan Davis, are each at liberty to expend from the said accounts with BT Financial Group (the investment management arm of Westpac Banking Group) a total sum not exceeding $1,000 per week on living expenses and the second defendants, Gregory James Davis and Deborah Susan Davis, are at liberty to expend a sum not exceeding $20,000 from the said accounts with BT Financial Group (the investment management arm of Westpac Banking Group) on legal advice and representation properly and necessarily obtained provided that, before expending the said money on legal expenses, the said defendants shall, by their solicitors on the record, inform the plaintiffs’ solicitors on the record in writing of the source or account from which such sums are to be drawn.”
  1. An application was subsequently made by the second defendants to vary the orders made by Justice Holmes. Some of the affidavit material filed in support of that application will be referred to in the course of these reasons.
  1. On 22 July 2005, Mr Davis swore that he and his wife had $270.39 in their Rockhampton NAB account as at 1 July 2005 and $2,952.01 in their Albury Westpac account as at 18 July 2005; and that he had $207,712.72 in his BT account as at 31 May 2005. Mrs Davis swore she had $256,152.21 in her BT account as at 31 May 2005.
  1. Mrs Davis swore in an affidavit filed on 22 July 2005 that advice by her solicitors of the plaintiffs’ mareva application was the “final straw” for her. She panicked about their share portfolio being frozen and requested Mr Davis to sell the shares and convert the accounts to cash which she said her husband reluctantly agreed to do. She said that since the orders made on 22 February 2005, she had been prevented from using funds derived from share dividends or share trading and had no other sources of income.
  1. Mr and Mrs Davis were made bankrupt on their own petitions on 11 November 2005.

Loans from family members

  1. Mr Davis swore to receiving loan funds from various family members, in particular his brother, Clive Gordon Davis, and Mrs Davis’s mother and father, Robert William Cairns and Annie Olive Cairns (Bob and Olive Cairns). In paragraph 63 of his affidavit filed 22 July 2005, he said that in 2002 he had for some time held shares in “Burns Phillip” (I presume he meant the well-known public company, Burns, Philp & Company, Limited). He said that while the shares were registered in the name of himself and his wife, most of the shares had been purchased with money lent to him by his brother, Clive Davis, and his wife’s parents, Bob and Olive Cairns. On 28 October 2002, a parcel of those shares was sold for $201,853.50 and on 29 October 2002, a parcel was sold for $56,916.62. Those moneys were then paid into the Rockhampton NAB account. Mr Davis said those moneys were then used by himself and his wife in purchasing the second plaintiffs’ property “Lochan Ora”.

Loans from Clive Davis

  1. With regard to loans from his brother Clive, Mr Davis said at paragraphs 84 to 87 of his affidavit filed on 22 July 2005 that Clive lent him NZ$150,000 to use in a business he operated in New Zealand. When Mr Davis sold that business he used the moneys owing to Clive to buy shares. He said he sold these shares from time to time to purchase businesses or houses and repaid Clive from time to time, often in cash, from income generated by the Albury/Wodonga business.
  1. Mr Davis said in paragraph 86 of his affidavit filed on 22 July 2005 that “in the later part of 2004, Clive contacted me to request I repay the balance of the loan, which I did.” He said he did not then owe any money to Clive.
  1. On 28 July 2005, Clive Davis filed an affidavit in support of the application by the second defendants to vary orders made by Justice Holmes on 22 February 2005. He said that he and his brother had a long history of assisting each other in business by lending money to each other. He deposed that in late 1998 when Mr and Mrs Davis were about to leave New Zealand to live in Australia, approximately $155,000 was owing to Clive Davis from his brother. Mr Davis informed Clive that the funds were then in the form of shares he had purchased in his and his wife’s name in various companies, one of which Clive Davis recalls as “Burns Phillip”. Clive said that he accepted his brother’s suggestion in early 2001 that rather than repay Clive from the sale of the shares, Mr Davis would invest the money from the sale of the shares to purchase the Albury/Wodonga business and that Clive would be repaid from income obtained from the operation or sale of the business. Clive Davis said he then received payments into a bank account or in cash on occasions when he visited Australia. In paragraph 8 of that affidavit, he swore that “the last of the payments from my brother to pay out any monies outstanding to me were paid in January 2005. There is [sic] no further sums owing to me by my brother at this point in time.” 
  1. In his affidavit filed 22 November 2005, Mr Davis referred to his brother’s affidavit filed on 28 July 2005 and said that he and his wife were indebted to his brother Clive in an amount of approximately NZ$155,000 from about 1998. He said that over time they were able to make repayments typically in cash on his visits to Australia, and that when the undertaking was given to the court, Clive was owed approximately NZ$30,000. Mr Davis said that in August 2004, Clive asked for the last of his money to be repaid. Mr Davis said he caused three repayments to be made to Clive Davis between August 2004 and January 2005 by telegraphic transfer from the Albury Westpac account. Those payments were NZ$12,500 on 18 August 2004; NZ$7,000 on 20 October 2004 and NZ$10,000 on 18 January 2005. The payment on 20 October 2004 was made less than a fortnight after Mr Davis had reiterated in an affidavit sworn on 7 October 2004 that he was prepared to abide by his earlier undertaking not to remove any assets from Queensland.
  1. When cross-examined about the repayments made to Clive Davis before the giving of the undertaking, Mr Davis became vague and gave unsatisfactory explanations. He said that the transactions were in cash and he had no record or recollection of where or when they occurred. This compares with the amounts paid by telegraphic transfer after the undertaking was given about which he was able to be precise and specific.
  1. Mrs Davis revealed in cross-examination that Clive Davis was paying the legal fees of herself and her husband to defend the contempt proceedings.

Loans from Mr and Mrs Cairns

  1. On 22 July 2005, Mr Davis filed an affidavit in support of the defendants’ application for variation of the orders made by Justice Holmes on 22 February 2005. At paragraph 81 and 83 of that affidavit, Mr Davis said that his wife’s parents had lent substantial sums of money to them over the time of their marriage and that they had given them financial assistance after February 2005 but that Mr and Mrs Davis did not owe any money to Mr and Mrs Cairns for loans made prior to 22 February 2005.
  1. Mr Davis swore in paragraph 68 of his affidavit filed on 22 July 2005 that $60,469.30 of the moneys paid out of court in November 2004 to the second defendants was used to pay outstanding legal fees and the remaining $196,118.54 was paid to the second defendants by cheque from their solicitors. The cheque was then banked into the second defendants’ Albury Westpac account by deposit at the Brisbane branch of the Westpac Bank on 17 November 2004. This was the money which, Mr Davis swore, he and his wife wished to use to purchase a house. The bank statement exhibited to his affidavit shows two large withdrawals. On 25 November 2004, $10,000 was withdrawn from the Capalaba branch of the Westpac bank. On 26 November 2004, there was a withdrawal of $180,000 by cheque no. 300100. He explained in his affidavit that the $180,000 was in part payment of the loan by his wife’s parents of the moneys used to purchase the “Burns Phillip” shares and then Lochan Ora. $180,000 was deposited into Mr and Mrs Cairns’s account at the Commonwealth Bank at Southport (“Mrs Cairns’s Commonwealth Bank account) on 26 November 2004.
  1. Mrs Cairns also swore an affidavit which was filed on 22 July 2005 in support of the application to vary the orders made on 22 February 2005. In that affidavit she said that since September 1998, she and her husband had lent money to Mr and Mrs Davis. She said she had kept a handwritten note of the amounts lent by herself and her husband to Mr and Mrs Davis in old diaries, which are dated 1985. A typed schedule was exhibited showing when payments were made by Mr and Mrs Cairns to Mr and Mrs Davis and when they were repaid. That schedule showed that all the moneys had been repaid. There were no other records of the loans made. She said that she and her husband had lent $660,000 to her daughter and son-in-law. The schedule reproduced the dates and amounts from the notes she kept in the old diaries. However, in cross-examination she volunteered that the dates recorded were not reliable. She said she did not know who produced the schedule or what was their source. She presumed that they used the notes in her old diaries. The schedule, however, had a further loan of $50,000 said to have been made in December 1999 which was not referred to in the diaries as a loan but as a repayment.
  1. On 11 November 2005, an affidavit sworn by Mrs Cairns was filed in response to this application. In that affidavit she gave the following account of the source of the funds she lent to her daughter and son-in-law. She said that her father was a bookmaker. He died on 19 August 1987 and when she was cleaning “his house” shortly after his death she found $635,000 cash in a suitcase. She said that she had requested all repayments of money lent by her to Mr and Mrs Davis to be made in cash. All repayments were made in cash apart from one payment made by cheque in late 2004 which was deposited to the credit of her Commonwealth Bank account at the Southport branch. She reiterated that she had no documents relating to the loan transactions and said she did not keep bank statements.
  1. Some factual questions arose for determination as a result of this history being given of loans from Mr and Mrs Cairns to Mr and Mrs Davis which depended on the veracity of the account given by the parties to the transactions.

Source of the money

  1. The first question was whether the story given as to the source of the money was true. Mrs Cairns was an elderly woman who suffers from emphysema. She said at the commencement of her evidence that before she retired, she had worked as a bank teller. When, during the course of cross-examination, she wished to excuse something on the basis that her maths were “not very good” she resiled from saying she had been a teller, saying she worked in the encoding department of the bank. This change in itself was hardly significant but it was consistent with a pattern of inconsistencies noticeable when she gave her evidence. In cross-examination, she gave this version of how she came to have such a lot of cash after the death of her father:

“In New Zealand in 1987, I think it was – ’87 – yeah, ’87, and he’d lived with me for a number of years.  Before he died he went into a – a nursing home and then he went into a hospital.  He was there for a couple of weeks then he died.  And after he was buried I was cleaning up his room where he’d resided with me, all his belongings and pieces, – bits and pieces, and suitcases was all there and I thought, “Oh give these to one of the charities.”  Went through to see what was in the suitcases and old clothes and bits and pieces, passports and things; in the other one was money – a lot of money – a lot of lot of money.”

  1. She said there was over $600,000 in New Zealand currency. She said that the only reason she could think that he got this money was from being a bookmaker, “because he did that all – all his life.”
  1. She said she did not put it in the bank because she was “ready to spend it.”. She said she brought it to Australia during a number of trips over many years. She said she and her husband carried cash in suitcases or on his body or on her body. They did not declare it. She said she put the money in a secure box somewhere in Sydney, the whereabouts of which she could not now remember. She said that she converted it into Australian dollars from time to time but apparently still kept it hidden. No reason was given for this furtive behaviour until Mr Lilley suggested to her that the whole story was a fabrication and that the money had been given to her by the male second defendant to avoid his creditors. Mr Lilley asked her again about whether there was any record that she ever had $600,000 or $650,000 in cash. At that point she volunteered that she had kept it secret as she had not wanted to pay any income tax.
  1. When Mrs Cairns was further cross-examined about her father’s money the story became more and more vague. When asked where he was a bookmaker, she unhelpfully replied, “New Zealand”. She then said he was a part time barman and she assumed he was a bookmaker although she did not know when he was alive that he was a bookmaker. The following exchange is illuminating as to how unsatisfactory her story was:

“… he wasn’t a licensed bookmaker? -- Oh, no.

And did you not know that he was working -----? -- No, I didn’t know.

-----as a bookmaker? --I didn’t know till, oh a long time afterwards I found out.

Did he tell you eventually? -- Oh, he really didn’t tell me as such that, “I’m a bookie.”  He just – just – my father’s a typical Irishman and he just said, “Bet money.  Don’t bet on horses.”  And I said, “Why not should I bet on a horse?”, and he said, “Because people who bet on horses never win.” – because he told me – was his words to me.

So is that what led you to draw the conclusion when you found $653,000 in a suitcase-----?--That’s right.

-----after his death that he must’ve been a bookie? – Well, I assumed that.  Yes.  Where else would he have got it from.  He didn’t rob a bank or anything like that.  He was not that sort of person.  He was a quiet unassuming man.  Just use – just liked to get people-----.”

  1. In my view, the story, while occasionally beguiling, was patently untrue. It was invented to explain why Mr and Mrs Davis disposed of so much cash to Mr and Mrs Cairns after the principal litigation commenced.

Loans made and repaid?

  1. The next question was, if the money to make the loans did exist, how, when and what amounts were loans made and repaid. I will examine the evidence on this point in spite of the disbelief I have expressed about Mrs Cairns’s story about the source of the money. My doubts as to the existence of the money and the story that it was lent to Mr and Mrs Davis were compounded when Mrs Davis said in cross-examination that she was unaware of what her mother did or did not do with her money. Yet on the version given by Mr and Mrs Davis they were very well aware of what Mrs Cairns did with her money. On their version she lent it to them. When Mr Lilley then prompted Mrs Davis with her own version, that her mother could not have spent much of her money prior to September 2004 because it had been lent to Mr and Mrs Davis, Mrs Davis came close to revealing the truth when she said, before reverting to the agreed story, “That’s correct. If we – if we had the money, yes. We had the money.”
  1. Mrs Cairns’s evidence was that apart from spending some money for her family to go to Ireland, she held on to the money between 1987 and 1998, even though, on her version, she did not put it in the bank as she was ready to spend it.
  1. When cross-examined about the loans, Mr Davis said that he was unaware at the time that the loans were made that Mrs Cairns was keeping a record of the loans made. He kept no records, received the money in cash and did not know how many times cash was lent to them but nevertheless, he asserted, he kept an accurate mental note of how much was lent from time to time. He knew that approximately $660,000 had been lent to them. He said that she would give them the money in cash in a paper bag or a plastic bag. Mrs Cairns was living with Mr and Mrs Davis but Mr Davis said he did not know where she got the money from.
  1. The first transaction recorded in Mrs Cairns’s diary was for the loan of $150,000 in September 1998. Against the entry Mrs Cairns wrote “Shares”. Mr Davis’s evidence was that he and his wife were still living in New Zealand at the time, but that Mrs Cairns gave it to him in Australia. It was in the form of cash in a bag of some description. He could recall that he bought shares with the money through the stock broking firm of Morgans but could not recall whether he had deposited the cash into a bank account or had taken $150,000 in cash in a bag into Morgans to purchase the shares. His lack of memory of the details of what he said was the first occasion on which a relative had given him a large amount of cash had an inevitable impact on the credibility of his story.
  1. The second loan was of $100,000 in May 1999, against which Mrs Cairns noted “house”. Mr Davis said it was used to do alterations to a house he and his wife purchased at Gavin Island. He could not recall what he had done with the cash.
  1. The third loan was for $60,000 in June 1999. Mrs Cairns made no notation against it in her diary and Mr Davis said he had “no idea off hand” what he had done with it.
  1. The first repayment was recorded by Mrs Cairns as having been made in December 1999. This was for $50,000. When asked about this in cross-examination, Mr Davis said, “I’d obviously sold something at that particular stage pay her some money back.”
  1. The next two loans were in May and July 2001 and were for $30,000 and $65,000 respectively. Mrs Cairns had noted “Albury” against these payments and said in evidence that the cash was for the Albury/Wodonga business. Mr Davis said, “I remember her giving me the cash, because we were a tap for money because our budget was miles blown out.”
  1. Mr Davis said that he received $100,000 in cash from Mrs Cairns in September 2001 and $15,000 in October 2001. Mr Davis said he then paid her the amounts she recorded in her diary of $30,000 in each of December 2001 and January 2002, $20,000 in February 2002, $40,000 in each of April and June 2002, $25,000 in July 2002 and $15,000 in September 2002. He said that all of these payments were made in cash which he kept hidden at his home. He added, presumably by way of explanation, “We lived on seven acres then.”
  1. The Albury/Wodonga business was sold to the plaintiffs in October 2002. Mr Davis was not able to say how much he owed Mrs Cairns at that time but said he would have been “fully aware” at the time.
  1. A second diary by Mrs Cairns records a loan of $90,000 in early 2003.
  1. No more repayments were apparently made until September 2004. It will be recalled that the first undertakings had been given in March 2004. Mr Davis said that, in accordance with Mrs Cairns’s records, he repaid her $40,000 in each of September and October 2004 and $180,000 in December 2004. Mrs Cairns said she received a cheque for $180,000 made out in her name and she banked it. The banking records show it was in fact deposited on 26 November 2004.
  1. It was on 7 October 2004 that Mr Davis filed an affidavit in support of his application to have the $250,000 paid into court by the second plaintiffs paid to himself and his wife so that they could purchase a house. Out of the $196,000 the second defendants received after payment of their legal costs, they paid $180,000 to Mrs Cairns. This was done in spite of the fact that on 28 October 2004, the second defendants undertook to the court that in the event that the plaintiffs obtained judgment against the first defendant, the second defendants would pay to the first defendant an amount equivalent to the amount of funds paid out of court. The evidence that these moneys were paid to Mrs Cairns is found in the statements of Mrs Cairns’s bank account referred to earlier and the relevant deposit slip. Prior to that time, the relevant bank statements show no more than the deposit of a Centrelink pension and the payment of living expenses. On 6 December 2004, Mrs Cairns withdrew $20,000 from her bank account.
  1. In January and February 2005, Mr Davis repaid, he said in accordance with what was recorded in Mrs Cairns’s diary, $200,000 in cash. Mrs Davis said that the reason for this repayment was because in January, and no earlier, her mother asked for the money to be repaid to her as she was concerned as to the stability of the marriage between Mr and Mrs Davis. This contradicted, albeit slightly, her mother’s sworn evidence that she asked for the return of her money in December 2004. On Mrs Davis’s story, there was merely an uncanny coincidence between when the plaintiffs asked for evidence of the second defendants’ assets in January 2005 and the payment to Mrs Cairns of $200,000.
  1. Mr Davis said the source of the $200,000 cash was two cheques recorded on the butt as being for “Clive” (his brother’s name) which he cashed and gave to Mrs Cairns. One was for $100,000 and the second for $90,000. He said he also gave her an additional $10,000 cash. He said that he still had more than $500,000 in his BT account if the second defendants had been required to reimburse the first defendant the moneys paid out of court in accordance with their undertaking. The records of the Rockhampton NAB account show, as previously mentioned, that there were in fact two withdrawals of $100,000 and withdrawals of $90,000 and $10,000 between 2 and 10 February 2005 from the Rockhampton NAB account.
  1. Mrs Cairns’s bank statements show that on a number of occasions during 2005, Mrs Cairns withdrew cash by cheque or direct withdrawal. On 19 January 2005, she cashed a cheque for $100,000. On 18 February 2005, Mrs Cairns withdrew $60,000 by cash cheque. That effectively disposed of the $180,000 paid by Mr and Mrs Davis to Mrs Cairns in December 2004. There was no substantial deposit into Mrs Cairns’ account in the first half of 2005. On 26 August 2005, $20,000 was withdrawn in cash and on 29 August 2005, a cheque for $10,000 was cashed. This reduced the balance in the account to $34,979.60. On 31 August 2005, $79,000 was deposited into Mrs Cairns’s account. The code for this deposit was “LOYDG B22 EBS WESTPAC DOM 0R1E01.” This was not explained although it might be related to a cheque for $50,000 written by Mrs Cairns on 19 April 2005. As these amounts were not explained in evidence, I shall not speculate about them. On 6 September 2005, a cheque for $100,000 was cashed reducing the balance in the account to $14,101.55. On 18 October 2005, $5,000 was deposited into Mrs Cairns’s account from the National Australia Bank in New Zealand.
  1. As a result of the repayment of $200,000 in February 2005, according to Mr Davis, Mrs Cairns had been paid what she was owed and there were no moneys owing to her in February 2005. This is shown by the schedule which shows $660,000 in loans made and the same amount in repayments. However the schedule records a loan made to Mr and Mrs Davis by Mrs Cairns of $50,000 in December 1999. As I have previously mentioned, that did not appear in Mrs Cairns’s diary entries as a loan from her but as $50,000 repaid in December 1999. It was wrongly set out in the schedule. This mistake meant that, if Mrs Cairns’s diary entries were correct, she in fact lent $610,000 to Mr and Mrs Davis and they had repaid $710,000.
  1. If, as appeared to be the case in the records in the diaries, the $90,000 which was recorded as lent in 2003, was balanced by amounts of $20,000, $40,000 and $30,000 which were on the opposite page in Mrs Cairns’s diary, representing the other side of the ledger, or amounts repaid, then the schedule was even more incorrect. While if that were correct, the amount of $610,000 lent would not change, it would mean that she had in fact been repaid $800,000, in other words Mrs Cairns, even on her version, received as much as $190,000. or as little as $100,000 more in repayments than she lent. There was no suggestion of any interest owing so, even on their own version, this was just overpayment by Mr and Mrs Davis to Mrs Cairns at a time when their behaviour was governed by the undertakings they had given to this court.

What happened to the money paid to Mrs Cairns

  1. Mr Davis agreed with the suggestion made by Mr Lilley in cross-examination that by the order getting the moneys out of court and paying those moneys to Mrs Cairns, Mr Davis had effectively disposed of all of the first defendant’s assets. Neither of the second defendants took any step to inform the court that they had decided not to use the moneys apparently owing to the first defendant which were paid out of court to the second defendants to buy a house. He said that the reason was that they could not afford a house. Yet in the six month period, September 2004 to February 2005, the second defendants said they paid Mrs Cairns $460,000 in cash. He did not disclose to the court at any time before payment of the moneys to Mrs Cairns that they owed her any money. Mr Davis said he did not know what his mother-in-law had done with that cash but he knew she had not bought any assets.
  1. On 5 September 2005, administrators were appointed to the first defendant. It is now in liquidation, having been wound up on 4 October 2005. On 11 November 2005, the second defendants became bankrupt on their own petition.
  1. Mrs Cairns said that she lost the $460,000 gambling with her daughter, the female second defendant, at poker machines. She said they went to many different clubs and casinos and never had a card at any of those places so there was no record of their gambling. They went three or four days a week after February 2005. This apparent massive loss from gambling occurred between Mrs Cairns’s receipt of the money from her daughter and son-in-law and yet on her story she had held on to the money from 1987 to 1998 without gambling it away.
  1. When asked if Mr Davis told her about the undertakings he had given to the court about the disposal of the moneys, she asked why would he tell her. She said, “Why should I save it if he’s giving it to the court. I mean, my money, wasn’t it, I could do whatever I wanted with it.” Mrs Cairns said she gave half of the money to her daughter, Mrs Davis, to gamble with. Mrs Davis supported this story about the gambling and that they had lost all of it.
  1. Yet Mrs Davis had sworn on 22 July 2005, when seeking a variation of the order made by Justice Holmes on 22 February 2005, that she needed the freezing order lifted and that she had no source of income apart from her BT account. She swore at paragraph 28 and 29 of that affidavit:

“28.Since the order of 22 February 2005 my husband and I have drawn a total of $1,000.00 per week from our BT accounts for living expenses.  We are currently paying $800.00 per week rent for a house where my parents and my daughter reside.  Fortunately, my parents have been paying the rent.  We pay electricity, gas, telephone and insurance on my vehicle. … [w]e have let the comprehensive insurance on Greg’s vehicle and our household contents lapse as we cannot afford to pay the premium.  We spend approximately $250.00 on food each week. 

  1. The sum of $1,000.00 per week is insufficient to meet our ordinary living expenses.  Embarrassingly, I have relied on my mother to pay for some groceries and fuel for my vehicle.” 
  1. What she failed to disclose was that on the version she gave on the hearing of this application, she had had more than $200,000 given to her by her mother which she had lost gambling from February 2005.
  1. I do not accept that Mrs Cairns lent any money to Mr and Mrs Davis. This was an elaborate story told to justify the second defendants’ behaviour in disposing of their assets, in part to Clive Davis and in part to Mrs Cairns, assets which might have been used to satisfy any judgment against the defendants in favour of the plaintiffs in the principal litigation.

The contempt charges

  1. It is against this factual background that I set out in full the charges alleged against the second defendants in the application before the court. I have inserted the discrete charge by number where a distinct, separate change has been made. The plaintiffs applied for the following orders:

“That the second defendants Gregory James Davis and Deborah Susan Davis be cited for contempt of court in that they as the second defendants and as the only directors of the first defendant gave, and caused the first defendant to give, undertakings to the court in the following terms ‘That they will not remove any assets from Australia’ as recorded in the order of Fryberg J made 25 March 2004 and thereafter breached and caused the first defendant to breach that undertaking.  The following are the particulars of those breaches:

  1. On or about 7 April 2004 the first defendant completed the sale of its business at Albury Wodonga and received net proceeds of sale of $271,170.56 which sum was paid into the bank account of the second defendants as appears from Exhibit 44 to the affidavit of Gregory James Davis sworn 21 July 2004;
  1. On or about 28 October 2004 the sum of $256,587.84 was paid out of Court to the first defendant pursuant to the order of Helman J made 28 October 2004;
  1. By on or about 16 February 2005 the first defendant had no assets as appears from the affidavit of Gregory James Davis sworn 16 February 2005;
  1. [CHARGE 1] As appears from the affidavit of Clive James Davis sworn 21 July 2005 and paragraphs 84 to 87 of the affidavit of Gregory James Davis filed 16 July 2005:

iClive James Davis is the brother of Gregory James Davis;

iiIn or about January/February 2005 Gregory James Davis paid to Clive Gordon Davis the balance of an outstanding loan of approximately $150,000.00 or $155,000.00;

iiiClive James Davis resides in Tauranga New Zealand;

  1. [CHARGE 2] On or about 17 August 2004 cheque no 300086 in the sum of $11,772.60 was drawn on the account of Mr GJ and Mrs DS Davis with the endorsement that it was payable to “WP TT Clive” as appears from exhibit JST-24 to the affidavit of Jason Simon Tewson;
  1. [CHARGE 3] On or about 7 February 2005 cheque no 000238 in the sum of $100K was drawn on the account of Deborah Susan Davis and Gregory James Davis with the endorsement that it was payable to “Clive” as appears from exhibit JST-22 to the affidavit of Jason Simon Tewson sworn 30 September 2005 and the proceeds of the cheque were paid to Clive Gordon Davis who is the brother of Gregory James Davis and who resides in New Zealand;
  1. [CHARGE 4] On or about 9 February 2005 cheque no 000239 in the sum of $90.00K was drawn on the account of Deborah Susan Davis and Gregory James Davis with the endorsement that it was payable to “Clive” as appears from exhibit JST-22 to the affidavit of Jason Simon Tewson and the proceeds of the cheque were paid to Clive Gordon Davis who is the brother of Gregory James Davis and who resides in New Zealand;
  1. [CHARGE 5] On or about 31 March 2004 cheque no 300053 in the sum of $374.00 was drawn on the account of Deborah Susan Davis and Gregory James Davis with the endorsement that it was payable to Taupo Ika Nui as appears from exhibit JST-25 to the affidavit of Jason Simon Tewson sworn 30 September 2005;
  1. [CHARGE 6] On or about 4 January 2005 cheque no 000233 in the sum of $319.00 was drawn on the account of Deborah Susan Davis and Gregory James Davis with the endorsement that it was payable to Taupo Ika Nui as appears from exhibit JST-22 to the affidavit of Jason Simon Tewson sworn 30 September 2005;
  1. Taupo Ika Nui is a timeshare resort in Taupo New Zealand as appears from Exhibit JST-23 to the affidavit of Jason Simon Tewson sworn 30 September 2005.
  1. [CHARGE 7] On or about 30 April 2004 Gregory James Davis caused the sum of $5283.02 to be paid by Westpac Banking Corporation from funds then in his possession or in the possession of the second defendants jointly to an account at the Westpac Banking Corporation Wellington New Zealand as appears from paragraphs 88 to 92 of the Affidavit of Gregory James Davis sworn 21 July 2005 and exhibit GJD 51 thereto;
  1. [CHARGE 8] On or about 31 May 2004 Gregory James Davis caused the sum of $5392.29 to be paid by National Australia Bank Ltd from funds then in his possession or in the possession of the second defendants jointly to an account at the Bank of New Zealand Palmerston North New Zealand as appears from paragraphs 88 to 92 of the Affidavit of Gregory James Davis sworn 21 July 2005 and exhibit GJD 51 thereto;
  1. [CHARGE 9] On or about 8 November 2004 Gregory James Davis caused the sum of $5585.04 to be paid by Westpac Banking Corporations from funds then in his possession or in the possession of the second defendants jointly to an account at the Westpac Banking Corporation Wellington New Zealand as appears from paragraphs 88 to 92 of the Affidavit of Gregory James Davis sworn 21 July 2005 and exhibit GJD 51 thereto.
  1. [CHARGE 10] That the second defendants Gregory James Davis and Deborah Susan Davis be cited for contempt of court in that they each gave an undertaking to the Court in the following terms ‘That they will not remove the proceeds of sale of the second defendants property at 44 Berry Dairy Road Parkhurst Rockhampton being Lot 1 on RP 617171 Parish of Fitzroy [the Property] from Queensland without first giving the plaintiffs’ solicitors 7 business days notice of their intention to do so’ as recorded in the order of Fryberg J made 25 March 2004 and thereafter breached that undertaking.  The following are the particulars of the breaches:
  1. On or about 5 April 2004 the second defendants received net proceeds of sale of the Property in the sum $287,773.41 as appears from exhibit GJD 39 to the affidavit of Gregory James Davis sworn 21 July 2005;
  1. On or about 17 November 2004 $196,118.54 of the sum referred to in paragraph 1(b) above was paid to the joint account of the second defendant as appears from Exhibit GJD 45 (marked 43) but appearing at p 231 of the exhibits to, and referred to at paragraphs 67 to 69 of the affidavit of Gregory James Davis sworn 21 July 2005;
  1. On or about 7 April 2004 the second defendants received the sum of $271,170.56 referred to in paragraph 1(a) above;
  1. In the period 1 July 2004 to February 2005 the second defendants received $102,102.42 from share trading and dividend income as appears from paragraphs 70 and 71 of the affidavit of Gregory James Davis sworn 21 July 2005;
  1. As at 21 July 2005 the second defendants had total assets of $210,935.12 of which only $270.39 is located within the State of Queensland as appears from paragraphs 55 to 60 of, and exhibit GJD 40 (marked 39) but at pages 204 to 208 of the exhibits to, the affidavit of Gregory James Davis sworn 21 July 2005;
  1. The second defendants have at no time given the plaintiffs’ solicitors notice of their intention to remove any money from the State of Queensland.
  1. [CHARGE 11] That the second defendants Gregory James Davis and Deborah Susan Davis be cited for contempt on the grounds that both in their capacity as directors of the first defendant and as the second defendants they breached and they caused the first defendant to breach, the duty of disclosure in rule 211 of the UCPR by falsely uttering and falsely disclosing that the documents in their lists of disclosed documents which are listed in column one below were created by the authors respectively listed in column two below when in fact those documents were not created by those authors but were created by one or other of the second defendants so as to pervert the course of justice:

Disclosure no

Document

“LMK” Exhibit No.

Person Who Made Document

O.189

Invoice No. 019721 for labour

“LMK-156”

A. Morgan

R.2

Tax invoice Hidden Valley Trees

“LMK-158”

Hidden Valley Trees

R.63

Tax invoice Dollar Curtains & Blinds

“LMK-170”

Dollar Curtains & Blinds

R.103

Tax invoice Flair 500 Pty Ltd

“LMK-173”

Flair 500 Pty Ltd

R.151

Tax invoice Bits & Pieces Fabrics

“LMK-253”

Bits & Pieces Fabrics

R.153

Tax invoice Sommer’s Carpets

“LMK-175”

Sommer’s Carpets

R.170

Tax invoice The Lighting Shop

“LMK-177”

The Lighting Shop

R.175

Tax invoice Acril Convex Pty Ltd

“LMK-178”

Acril Convex Pty Ltd

R.179

Tax invoice Mid States Appliances

“LMK-179”

Mid States Appliances

  1. The second defendants admitted charges 2, 5, 6, 7, 8 and 9. Mr Davis said he had caused $45,000.00 in eight separate transactions to be sent out of Australia in breach of the undertaking given on 25 March 2004. He apologised for doing so. Charges 1, 3, 4 and 11 were denied. The facts alleged in charge 10 were not denied but the second defendants said that although the moneys were moved out of Queensland into a BT account in Sydney, the second defendants had access to that account through branches of the Westpac Bank situated, inter alia, in Queensland. 
  1. It will now be convenient to deal with each of the charges seriatim.

Preamble to the charges

  1. It was not disputed that on 7 April 2004 the second defendants received $271,170.56 on the sale of the first defendant’s Albury/Wodonga business. Nor was it disputed that $256,587.84 was paid out of court to the second defendants pursuant to the order made by this court on 28 October 2004. The payment was in fact made on 8 November 2004. Neither is it disputed that as at 16 February 2005, the first defendant had no assets.

Charge 1

  1. As appears from the affidavit of Clive James Davis sworn 21 July 2005 and paragraphs 84 to 87 of the affidavit of Gregory James Davis filed 16 July 2005:

iClive James Davis is the brother of Gregory James Davis;

iiIn or about January/February 2005 Gregory James Davis paid to Clive Gordon Davis the balance of an outstanding loan of approximately $150,000.00 or $155,000.00;

iiiClive James Davis resides in Tauranga New Zealand.

  1. The evidence of this charge is found in Clive Davis’s statement in his affidavit that “the last of the payments from my brother to pay out any monies outstanding to me were paid in January 2005” and Mr Greg Davis’s sworn assertion in his affidavit filed on 22 November 2005 that he caused NZ$10,000 to be paid by telegraphic transfer to Clive Davis on 18 January 2005 from the Albury Westpac account. Clive Davis lived in New Zealand. This payment was in breach of Mr and Mrs Davis’s undertaking given on 25 March 2004 not to remove any assets from Australia.
  1. I am satisfied beyond reasonable doubt that charge 1 has been proved against Mr Davis. There is no evidence against Mrs Davis which would satisfy me beyond reasonable doubt that this charge has been proved against her.

Charge 2

  1. It was admitted that on or about 17 August 2004 cheque no 300086 in the sum of $11,772.60 was drawn on the account of Mr GJ and Mrs DS Davis with the endorsement that it was payable to “WP TT Clive” as appears from exhibit JST-24 to the affidavit of Jason Simon Tewson. “Clive” is Mr Davis’s brother who resides in New Zealand. This payment was in breach of Mr and Mrs Davis’s undertaking given on 25 March 2004 not to remove any assets from Australia. Mr Davis caused this payment to be made with the knowledge of Mrs Davis. The charge is proved beyond reasonable doubt against them both.

Charge 3

  1. On or about 7 February 2005 cheque no 000238 in the sum of $100K was drawn on the account of Deborah Susan Davis and Gregory James Davis with the endorsement that it was payable to “Clive” as appears from exhibit JST-22 to the affidavit of Jason Simon Tewson sworn 30 September 2005 and the proceeds of the cheque were paid to Clive Gordon Davis who is the brother of Gregory James Davis and who resides in New Zealand. 
  1. This charge was denied. It will be convenient to deal with it together with Charge 4 which is a related allegation.

Charge 4

  1. On or about 9 February 2005 cheque no 000239 in the sum of $90.00K was drawn on the account of Deborah Susan Davis and Gregory James Davis with the endorsement that it was payable to “Clive” as appears from exhibit JST-22 to the affidavit of Jason Simon Tewson and the proceeds of the cheque were paid to Clive Gordon Davis who is the brother of Gregory James Davis and who resides in New Zealand. 
  1. This charge was denied. Mr Davis swore at paragraph 3 of his affidavit filed on 22 November 2005, that although the cheque butts relating to the payments referred to in charges 3 and 4 are marked “Clive”, these withdrawals from the Rockhampton NAB account jointly held by Mr and Mrs Davis were payments to Annie Olive Cairns, his wife’s mother, not Clive Davis. He said that they were part payment to Mrs Cairns of amounts Mr and Mrs Cairns had advanced to Mr and Mrs Davis since 1998. He said, “Both cheques were made out to cash, which either I collected from the Capalaba branch, and represented payments made to Olive Cairns in cash in Queensland.” This convenient explanation was in my view patently untrue.
  1. The cheques were drawn on the second defendants’ Rockhampton NAB account. Copies of the relevant cheque butts are exhibited to Jason Tewson’s affidavit filed on 30 September 2005. The cheque butt for cheque no. 000238 is dated “7-2-04”. I accept that this was a mistake and the date referred to is 7 February 2005. The amount of the cheque is recorded as “100K” meaning $100,000. The detail of the cheque is recorded as “CLIVE”. The cheque butt for cheque no. 000239 is dated 10 February 2005; the amount is noted as “$90-00K” and the detail as “CLIVE”. These cheque butts record payments of $100,000 on 7 February 2005 and $90,000 on 10 February 2005 said to be payable or apparently to be paid to Mr Davis’s brother, Clive Davis. Despite the similarity in spelling between “Clive” and “Olive”, there is no reason why Mr Davis would have twice written “Clive” when he meant “Olive”. When asked about the first of these cheques, he prevaricated before denying that the cheque was used to pay Clive a debt of $100,000 saying quite adamantly that the “cheque butt was not used to pay Clive $100,000.” He said that the “cheque was for $100,000 which went to Olive.”
  1. His explanation in evidence was that he did not write anything on the cheque butt when he first wrote the cheque, that it was completely blank and that he later went back at some later date and wrote in “Clive”. He said that he did not know why he had done that. He had never thought the money was paid or payable to Clive. He then said that the butt was not completely blank but that he recorded the date and amount only at the time of writing the cheque. In re-examination, he changed his story, albeit only slightly, yet again. He told his counsel that he later wrote in “CLIVE” and also “K” on each of the cheques. His feeble attempts at explanation while being cross-examined as to why he subsequently wrote in “Clive” were most unsatisfactory. He was reduced to saying that there was no reason for him to write “Clive” on the cheque butts. There was no re-examination on this point.
  1. Both cheques in question were made out to cash and signed by Mr Davis. Clive Davis did not deal with the question of whether he received this money in his affidavit before the court. He swore that the last payment from Mr Davis to “payout any monies outstanding” to him was in January 2005. He is silent on whether any other moneys were paid to him by Mr Davis other than by way of repayment of a loan. I am satisfied beyond reasonable doubt that the only rational inference that can be drawn is that Mr Davis paid the amounts referred to in charges 3 and 4 in cash to his brother Clive whom he knew would take the cash back to New Zealand where Clive Davis lives.
  1. These payments were in breach of the undertaking given by the defendants on 25 March 2004 not to remove any assets from Australia. Mr Davis gave the cash to Clive knowing that it would be taken out of Australia and knowing that neither he nor his wife owed Clive Davis any money. I am also satisfied that Mrs Davis knew that the money had gone to Clive Davis and not to her mother. This was because of her intimate involvement in the untrue story about loans from and repayments to Mrs Cairns. Charges 3 and 4 have been proved beyond reasonable doubt against both Mr and Mrs Davis.

Charge 5

  1. The second defendants admitted that on or about 31 March 2004 cheque no 300053 in the sum of $374 was drawn on the account of Deborah Susan Davis and Gregory James Davis with the endorsement that it was payable to Taupo Ika Nui as appears from exhibit JST-25 to the affidavit of Jason Simon Tewson sworn 30 September 2005. As the plaintiffs alleged, Taupo Ika Nui is a timeshare resort in Taupo, New Zealand.
  1. Mr Davis said in his affidavit filed on 22 November 2005 that this payment and the payment which is the subject of charge 6 were in respect of maintenance debts regularly owing to Taupo Ika Nui, a time share scheme which Mrs Davis had owned since the early 1980s. The cheques were written by Mrs Davis. In her affidavit filed on 22 November 2005, Mrs Davis confirmed that she held a time share in Taupo Ika Nui and that the payments referred to in charges 5 and 6 were made in respect of maintenance debts.
  1. This payment was in breach of Mr and Mrs Davis’s undertaking given on 25 March 2004, only six days earlier, not to remove any assets from Australia. I am satisfied beyond reasonable doubt that this charge has been proved against both of them.

Charge 6

  1. The second defendants also admitted that on or about 4 January 2005 cheque no 000233 in the sum of $319 was drawn on the account of Deborah Susan Davis and Gregory James Davis with the endorsement that it was payable to Taupo Ika Nui as appears from exhibit JST-22 to the affidavit of Jason Simon Tewson sworn 30 September 2005.
  1. This payment was also in breach of the undertaking given by the second defendants on 25 March 2004 not to remove any assets from Australia. I am satisfied beyond reasonable doubt that this charge has been proved against both Mr and Mrs Davis.

Charge 7

  1. The second defendants also admitted that on or about 30 April 2004 Gregory James Davis caused the sum of $5,283.02 to be paid by Westpac Banking Corporation from funds then in his possession or in the possession of the second defendants jointly to an account at the Westpac Banking Corporation, Wellington, New Zealand as appears from paragraphs 88 to 92 of the Affidavit of Gregory James Davis sworn 21 July 2005 and exhibit GJD 51 thereto.
  1. This was in breach of the undertaking given barely a month earlier not to remove any assets from Australia. This charge will be dealt with together with charges 8 and 9.

Charge 8

  1. The second defendants also admitted that on or about 31 May 2004 Gregory James Davis caused the sum of $5,392.29 to be paid by NAB from funds then in his possession or in the possession of the second defendants jointly to an account at the Bank of New Zealand Palmerston North New Zealand as appears from paragraphs 88 to 92 of the Affidavit of Gregory James Davis sworn 21 July 2005 and exhibit GJD 51 thereto.
  1. This was also in breach of the undertaking given to the court on 25 March 2004 not to remove any assets from Australia.

Charge 9

  1. The second defendants also admitted that on or about 8 November 2004 Gregory James Davis caused the sum of $5,585.04 to be paid by Westpac Banking Corporation from funds then in his possession or in the possession of the second defendants jointly to an account at the Westpac Banking Corporation, Wellington, New Zealand as appears from paragraphs 88 to 92 of the Affidavit of Gregory James Davis sworn 21 July 2005 and exhibit GJD 51 thereto.
  1. This payment was also in breach of the undertaking given first on 25 March 2004 and reiterated by Mr Davis in his affidavit filed on 7 October 2004. In his affidavit filed on 22 November 2005, Mr Davis said the payments which are the subject of charges 7, 8 and 9, were made to Laracy Building Supplies Ltd, a New Zealand business, to satisfy debts owed since 2000. The first and second of these payments were made one month and two months respectively after he first gave the undertaking to the court and the third was made one month after he reiterated that undertaking in an affidavit. The excuse for the repayments rings very hollow when the payments were made so soon after the undertakings were given or reiterated. I am satisfied beyond reasonable doubt that charges 7, 8 and 9 have been proved against both of the second defendants.

Charge 10

  1. That the second defendants Gregory James Davis and Deborah Susan Davis be cited for contempt of court in that they each gave an undertaking to the Court in the following terms ‘That they will not remove the proceeds of sale of the second defendants property at 44 Berry Dairy Road Parkhurst Rockhampton being Lot 1 on RP 617171 Parish of Fitzroy [the Rockhampton Property] from Queensland without first giving the plaintiffs’ solicitors 7 business days notice of their intention to do so’ as recorded in the order of Fryberg J made 25 March 2004 and thereafter breached that undertaking.  The following are the particulars of the breaches:
  1. On or about 5 April 2004 the second defendants received net proceeds of sale of the Rockhampton Property in the sum $287,773.41 as appears from exhibit GJD 39 to the affidavit of Gregory James Davis sworn 21 July 2005;
  1. On or about 17 November 2004 $196,118.54 of the sum referred to in paragraph 1(b) above was paid to the joint account of the second defendant as appears from Exhibit GJD 45 (marked 43) but appearing at p 231 of the exhibits to, and referred to at paragraphs 67 to 69 of the affidavit of Gregory James Davis sworn 21 July 2005;
  1. On or about 7 April 2004 the second defendants received the sum of $271,170.56 referred to in paragraph 1(a) above;
  1. In the period 1 July 2004 to February 2005 the second defendants received $102,102.42 from share trading and dividend income as appears from paragraphs 70 and 71 of the affidavit of Gregory James Davis sworn 21 July 2005;
  1. As at 21 July 2005 the second defendants had total assets of $210,935.12 of which only $270.39 is located within the State of Queensland as appears from paragraphs 55 to 60 of, and exhibit GJD 40 (marked 39) but at pages 204 to 208 of the exhibits to, the affidavit of Gregory James Davis sworn 21 July 2005;
  1. The second defendants have at no time given the plaintiffs’ solicitors notice of their intention to remove any money from the State of Queensland.
  1. As previously indicated, the facts alleged in this charge were not denied. In paragraph 54 of his affidavit filed on 22 July 2005, Mr Davis swore that of the moneys deposited in the joint bank account of the second defendants from the sale of the Rockhampton property, “the majority of those funds have been invested into share margin lending accounts.” It appears that the share margin lending accounts to which he referred were accounts with BT in Sydney.
  1. In his affidavit filed 22 November 2005, Mr Davis said that the proceeds of sale of the Rockhampton property were paid into the Rockhampton NAB account in early May 2004. He said that over time those funds were paid into other accounts held by Mr and Mrs Davis or spent by them in the course of their daily lives. He said at that time the principal litigation was costing them many thousands of dollars and it was common for Mr and Mrs Davis to draw cheques made out to cash for their day to day living expenses. He said that on 30 July 2004, $200,030 was transferred from the NAB account into a Westpac account and then to an account with BT. No notice was given to the plaintiffs’ solicitors of the second defendants’ intention to remove those moneys from Queensland.
  1. Mr Davis said that since about the middle of 2003, he and his wife had been relying on share trading as their principal source of income. For that purpose they opened margin lending accounts with BT. He said that whilst the primary accounts were held in Sydney, they operated the account out of Westpac branches within Queensland, primarily in Brisbane, and accordingly he always considered the money to be accessible in Queensland. He accepted that the money was in fact transferred out of Queensland but that it had not occurred to him at the time that that was so because he and his wife would always have access to the funds in Queensland and the deposits were each made in Queensland. He said it was not his intention to breach his undertaking to the court by doing so and he regretted and apologised to the court and to the plaintiffs that the effect of his actions was in fact to move the proceeds of the sale of the Rockhampton property “contrary to my undertaking”.
  1. On 11 November 2005 when Mr and Mrs Davis were made bankrupt on their own petition, they disclosed just over $316,000 in cash which was the proceeds of their margin lending accounts with BT.
  1. The transfer of funds to the BT account was in breach of the undertaking given by the defendants on 25 March 2004, not to remove the proceeds of sale of the Rockhampton property from Queensland without first giving the plaintiffs’ solicitors seven business days prior written notice of their intention to do so. In my view, they well knew that doing so was in breach of their undertaking. This charge has been proved against both Mr and Mrs Davis beyond reasonable doubt.

Charge 11

  1. That the second defendants Gregory James Davis and Deborah Susan Davis be cited for contempt on the grounds that both in their capacity as directors of the first defendant and as the second defendants they breached and they caused the first defendant to breach, the duty of disclosure in rule 211 of the UCPR by falsely uttering and falsely disclosing that the documents in their lists of disclosed documents which are listed in column one below were created by the authors respectively listed in column one below were created by the authors respectively listed in column two below when in fact those documents were not created by those authors both were created by one or other of the second defendants so as to pervert the course of justice:

Disclosure no

Document

“LMK” Exhibit No.

Person Who Made Document

O.189

Invoice No. 019721 for labour

“LMK-156”

A. Morgan

R.2

Tax invoice Hidden Valley Trees

“LMK-158”

Hidden Valley Trees

R.63

Tax invoice Dollar Curtains & Blinds

“LMK-170”

Dollar Curtains & Blinds

R.103

Tax invoice Flair 500 Pty Ltd

“LMK-173”

Flair 500 Pty Ltd

R.151

Tax invoice Bits & Pieces Fabrics

“LMK-253”

Bits & Pieces Fabrics

R.153

Tax invoice Sommer’s Carpets

“LMK-175”

Sommer’s Carpets

R.170

Tax invoice The Lighting Shop

“LMK-177”

The Lighting Shop

R.175

Tax invoice Acril Convex Pty Ltd

“LMK-178”

Acril Convex Pty Ltd

R.179

Tax invoice Mid States Appliances

“LMK-179”

Mid States Appliances

  1. On 28 October 2004, in support of the defendants’ application to have the moneys which had been paid into court by the second plaintiffs paid out of court to the second defendants, Mr Davis filed an affidavit by leave which answered allegations contained in affidavits filed by the plaintiffs in answer to Mr Davis’s affidavit filed on 7 October, referred to earlier in these reasons. Mr Davis’s affidavit included the following paragraph relevant to this charge:

“14.In relation to paragraph 10.2 of Mr Raabe’s Affidavit, it is true that the Defendants had spent $855,265.00 in plant and equipment items in setting up ‘City Hall’.  Now produced and shown to me and marked ‘GD30’ are schedules of invoices and receipts for payments made by the Defendants in relation to that expenditure.  I am informed by my solicitors and verily believe that the invoices contained in those schedules have been disclosed to the Plaintiffs.”

  1. The schedule attached to the affidavit included reference to documents which were the subject of this charge, ie that those documents, which were disclosed by the defendants in the principal litigation, were in fact created by one or other of the second defendants so as to pervert the course of justice.
  1. On 31 March 2005, the defendants filed an affidavit sworn by Mr Davis, on behalf of himself and Mrs Davis and as a director of the first defendant, as to the documents the defendants were required to disclose in the principal litigation. Such an affidavit had been ordered by Justice Muir on 1 March 2005. The fourth consolidated and supplementary list of documents (the “defendants’ list of documents”) exhibited to that affidavit also listed the documents which are the subject of the contempt allegation.
  1. The male second defendant’s explanation for the provenance of these documents is found in paragraphs 3 to 42 of his affidavit filed on 22 July 2005. Mr Davis denied that the documents were fraudulently manufactured or constructed. He said that the only reason that he could think of that the businesses involved had made the allegations they had made was “self-interest.” He swore that:

“… the services and/or goods referred to in these documents were sourced from each of those business/persons at the or about the dates those invoices/receipts bear for the purpose of the renovation and fitout of “City Hall” (save for one exception…).”

  1. He said that most of the goods and services were paid for in cash. He and his wife were not from Albury/Wodonga and were therefore, he said, seen as “outsiders” when they announced their intention to re-open the Albury/Wodonga business. He was told, he said, that that business had previously collapsed owing a great deal of money to businesses in the district. He said that the second defendants were unable to obtain an overdraft facility with the local National Australia Bank branch and found it difficult to establish credit accounts with businesses in the district. He said that the “only way of getting things done was by offering to pay cash.”
  1. In his affidavit filed 22 November 2005, Mr Davis said that the list of documents was compiled by his solicitors on his instructions and upon his giving these solicitors the documents relevant to the issues in the proceedings. He said he did not deliberately set out to deceive anyone by producing the list in that form having relied at all times upon the face of each document and the circumstances in which they were produced to him, as being an honest account. In his oral evidence, Mr Davis said that each represented an invoice that he received from the person who supplied him with the goods.
  1. I shall consider the evidence relating to each one in turn although the effect of the evidence is, to some extent, cumulative.

1.Ashley Morgan

  1. The invoice in question is listed as document no. O.019721 in the defendants’ list of documents. It should be read in the context of a document entitled “Labour Content” (the “labour document”) which Mr Davis said that he produced for use in the principal litigation. The labour document lists a number of people, whom Mr Davis said were paid in cash for labour done for the setting up of the Albury/Wodonga business.
  1. It also lists himself and his wife who, he says, worked, “designing, managing and supervising the renovations” for a number of hours equivalent to $50,000 in his case and, in his wife’s case, $25,000. The labour document ascribed $20,000 worth of work to Ashley Morgan. Mr Davis said that no written records of the amount of time spent by the persons listed in the document were kept.
  1. The invoice disclosed at O.019721 (the “Morgan invoice”) is a standard printed invoice numbered 019721 with details handwritten on it. These details appear to show that the invoice is made out to the first defendant from Ashley Morgan for “Associated Building Work”, “Paid Cash only”, “Working from June 01 to November 01 Part Time.” It has written on it “This is not a tax invoice”. Where the form has the words “TOTAL (includes GST)” printed on it, the words “included GST” have been crossed out. The amount written in as the total is “21500-00”.
  1. Mr Davis’s explanation of this document is found in his affidavit filed on 22 July 2005:

“9.Ashley Morgan was working for Connelly Constructions, who I had engaged to attend to the renovation work at the site.  There was so much building and carpentry work to be done in those renovations that I approached Ashley to ask him if he was prepared to work at the site, outside of hours, on top of his work for Connelly Constructions.  I told him that I would pay him cash in hand on a weekly basis for the work.  Ashley told me that he had a young family and he was trying to establish himself financially and that those arrangements suited him well. 

  1. Ashley spent many months working at the premises.  Much of the work that he did was in the evenings and weekend.  He was paid for his work in cash, mainly at the end of each week.  On several occasions I was not going to be present at the conclusion of Ashley’s work for that week and I handed the cash amounts to Dean Murdoch (who was working for me and residing at the premises)  to pay Ashley for his work before Ashley left.
  1. I cannot understand why Ashley now denies that he did work for me.  I can only surmise that Ashley did not account for this income in his taxation returns and this may be a reason for his denials.”
  1. Dean Murdoch, who had known Mr and Mrs Davis for many years, and who worked with them in the Albury/Wodonga business, swore an affidavit also filed on 22 July 2005 in which he said he was told by Mr Davis that Mr Morgan had agreed to work outside of his ordinary working hours for cash. That added nothing to Mr Davis’s evidence. Mr Murdoch said he saw Mr Morgan there on many occasions on weekends and paid him cash which he had been given by Mr Davis. Mr Murdoch said nothing in his affidavit about the Morgan invoice. Mr Murdoch was a security guard and crowd controller by occupation whose role was limited after the initial set up. He had work as a night security guard elsewhere. His evidence was of no assistance in determining whether the Morgan invoice was genuine.
  1. Mr Morgan, on the other hand, has sworn an affidavit saying that the Morgan invoice was not issued by him. All his invoices are computer generated. Mr Davis did not pay him cash in hand for work to the value of $20,000.00 or $21,500.00. He said that he did complete some work at the premises known as “City Hall” referred to in these reasons as the Albury/Wodonga business while he worked for Connelly Constructions and as a result delivered invoices for $225.53 and $800.00 respectively. After working for Connelly Constructions he did some further work for Mr Davis at the Albury/Wodonga business and was paid a maximum of about $1,200.00 in cash. He gives other details of that work. I am satisfied that what Mr Morgan has said is correct.
  1. The question for consideration here, however, is not whether Mr Morgan did or not do any work for Mr Davis for which he was paid in cash but whether the invoice is a genuine document, given that it was disclosed in the principal litigation as an invoice received by the first defendant.
  1. In cross-examination, Mr Lilley showed Mr Davis two other invoices disclosed in the defendants’ list of documents which must be considered rather curious if the Morgan invoice is, as Mr Davis asserted, a genuine invoice from Mr Morgan. The first was an invoice from Furniture Imports and the second an invoice from TK Metal Finishes. The Furniture Imports invoice is numbered 019722 and the TK Metal invoice is numbered 019724. The Morgan invoice was in exactly the same printed form and was numbered 019721. Each invoice appeared to be from the same printed invoice book. Mr Davis was able to offer no explanation for this coincidence. The businesses are not related.
  1. Mrs Davis gave her evidence two weeks after Mr Davis gave his. By then, she had begun to think of an explanation, as this excerpt from her cross-examination shows:

“…do you agree that they are invoices which you and your husband have disclosed in these proceedings as invoices for expenditure by Chicago Investments on the City Hall business? -- Yes, they are.

Do you agree that they all appear to be from the same form or type of invoice book? -- Yes, they are.

Do you agree that they are each from an entirely different entity? -- Yes, they are.  

Do you agree that the three numbers – of the three numbers on the invoices, two are consecutive and the other one is one number removed from being consecutive? -- Yes, I do, yes, I see that. 

Do you agree with the proposition that they all came out of the same invoice book? -- Unless these three people knew each other, no. 

You’d agree with the proposition that it is most unlikely that three different suppliers would be using the same standard form of invoice and all be up to the same place in their book at the same time? -- Well, when I see the front one, Ash Morgan, he was working – he’d worked for us on the hotel for between five and six months, he was working outside his normal job to do our – to do this work for us, he probably had one of these books that he used, obviously he did.  The furniture one, I recall that, as the guy – the company had closed down.  We bought the stuff on the last day of this guy’s shop and he probably just obviously wrote the invoice from a store book.  The T K Metal Finishers, I can’t recall that one, no.  I do recall the first two. 

See, I suggest to you that they’re three invoices that either you or your husband created? -- No, that is untrue.  That is so untrue.  Untrue. 

I suggest to you that it is simply too unlikely for those three invoices to have those numbers and be created by entirely different people? -- These books just like a book that you buy at any office – office shop – book shop I would say by looking at-----

HER HONOUR: Have you bought a book like that? -- No.

Well, how do you know they’re books that you just buy at any-----Well, since this allegation because I’ve looked at that and that to me would be my answer to that.”

  1. From their layout and numbering it can readily be seen that the invoices are the following sheets in the book of invoices from which the Morgan invoice was taken. I accept what Mr Morgan said which was not challenged by cross-examination. I have no doubt that the Morgan invoice is a fabrication. It was created by one or other of the second defendants, with the knowledge of the other, to bolster their case in the principal litigation.

2.Hidden Valley Trees

  1. The document listed at R.2 (“the Hidden Valley Trees invoice”) in the defendants’ list of document is an order in a generic form marked with the printed number 32, with handwritten details as follows. The date is noted as “June 01” in script that appears to be in different handwriting from the rest of the handwriting that appears on the form. It is said to be to “Mr Davis” and from “Hidden Valley Trees, Gt Alpine Rd, Harrietville, Vic.” The quantity is said to be “25” and the description “mature pear trees ex yard @ $150.00/Tree.” The “Total Cash Only” price is said to be “$3750.00”. The order is marked as “paid 31.06.01”. No such date in fact exists. When questioned about this date, Mr Davis could see no problem with the document being dated 31 June. Neither presumably did the person who wrote that date as the date of payment. I am satisfied that that person was Mr Davis.
  1. Mr Davis said with regard to that invoice, in paragraphs 14 and 15 of his affidavit filed on 22 July 2005, that in about June 2001, he was outside the Albury/Wodonga business with his wife when a man asked him whether they needed a landscaper. Mrs Davis said she wanted ‘big trees’. Mr Davis asked him for a quote. Mr Davis said that within a week or so, the man came back into City Hall and presented him with a draft landscaping plan and a quote accompanying the plan, which was for several thousand dollars. Mr Davis said the quote was for far more than what they were willing to spend on the landscaping and so Mr Davis said he asked whether it was possible for him to supply the trees only. They settled on a cash price of $3,750.00 for 25 trees. He said the trees arrived on a very rainy day on the back of a 4 tonne open top truck, which was covered by a canopy. Mr Davis said he helped the man unload the trees with the assistance of a forklift, which he borrowed from Weatheralls (the brick business next door). He spent the next two to three days planting the trees with the assistance of his wife and Dean Murdoch. At the time of the delivery of the trees, he said he exchanged the $3,750.00 in cash for the Hidden Valley Trees invoice, which is the subject of this allegation.
  1. Mr Murdoch’s affidavit evidence was that he helped plant trees but did not know anything about the source or purchase price of the trees.
  1. Thomas Christian was involved in the purchase in 2001 of the building on which the Albury/Wodonga business was conducted, and his children were the owners and lessors of the property on which the Albury/Wodonga business operated. Mr Christian swore an affidavit in which he referred to the paragraphs of Mr Davis’s affidavit the contents of which I have recited in paragraph [132]. Mr Christian said that in fact his family bought and paid for the mature Manchurian pear trees that were planted at the Albury/Wodonga business. Mr Christian’s family also paid for the holes to be dug for the trees and removed rocks from the grounds. Mr Davis assisted them to plant the trees.
  1. Jenny Whittaker is the office manager of Hidden Valley Trees. In response to an enquiry by the male second plaintiff about the Hidden Valley Trees invoice, Ms Whittaker looked at the invoice and said in a letter dated 21 January 2005 that it “has not been written by Hidden Valley Trees.” She said she had searched their records and could not find any transaction for the sale of any trees to Mr Davis during this period. She swore an affidavit deposing to the truth of what was contained in the 21 January letter and of the contents of an email which she sent to the female second defendant where she said that neither she nor her husband had any recollection or records of supplying trees to the Davises.
  1. I am satisfied beyond reasonable doubt that the document was concocted by the second defendants.

3.Dollar Curtains & Blinds

  1. Document R.63 in the defendants’ list of documents was a hand written invoice purportedly from Dollar Curtains & Blinds, Wodonga (“Dollar Curtains invoice”) dated 15 September 2001. It purports to be for the supply and fitting of Venetian blinds in the back office at the site of the Albury/Wodonga business for $600.00. It is marked “Paid in Full” and initialled.
  1. The manager of the business, Rosemary Daly, swore that the document was not from her business. It had a different layout; she did not recognise the handwriting or the “signature”.
  1. Mr Murdoch said in his affidavit filed 22 July 2005, “I cannot explain the statement, allegedly made by Dollar Curtains, that ‘this document is not ours’.” His explanation for this was that venetian blinds were fitted to the premises and that he had requested Mrs Davis to arrange for some blinds to be put in place in about September 2001. This evidence of course does not mean that the Dollar Curtains invoice was genuine.
  1. Mrs Davis swore in her affidavit filed 22 July 2005:

“Whilst I can not personally recall ordering the venetian blinds or paying for them, I recall Dean approaching me and requesting that blinds or curtains be installed for privacy and security reasons.  This occurred prior to the opening of City Hall for business.  I recall venetian blinds being fitted during the renovation stage.  I say the invoice, which is exhibit “LMK-170”, is probably the invoice that relates to the purchase of those venetian blinds.”

  1. When cross-examined about the Dollar Curtains invoice, Mrs Davis said it was “obviously the invoice we were given for the venetian blinds that we purchased.” She conceded that only she or her husband had an interest in creating the invoice, if it were a false invoice. She denied that either of them did so.
  1. This document was produced by the second defendants to defend their claim. It is false. Mrs Davis is the person who said she dealt with Dollar Curtains. I am satisfied that both Mr and Mrs Davis created or knew that the other created this false invoice.

4.Flair 500 Pty Ltd

  1. Document R.103 in the defendants’ list of documents is a computer generated tax invoice apparently in the name of Flair 500 Pty Ltd (the “Flair 500 invoice”) dated 10 October 2001 regarding four Flair 500 lounge two seaters priced $800 each and five single high back chairs priced at $250 each. The total price is said to be $4,450.
  1. Chris Vellios is the Managing Director of Flair 500 Pty Ltd (“Flair 500”) as his company purchased the business in May 2004. Although he did not own the business in 2001, he was able to swear that the Flair 500 invoice was not a genuine invoice from Flair 500 as it was not in the form of invoices used by the business since before 2001, the product description was not the type of product description which is used by Flair 500, and the payment terms on the Flair 500 invoice were said to be within 30 days of the statement whereas payment terms for Flair 500 were either COD or seven days.
  1. Mr Keogh said that he recalled that at the Albury/Wodonga business there were approximately four blue checked lounge suites, each having a two seater settee and two chairs which were a cheaper type of lounge suite. He recalled Mrs Davis saying she had obtained them really cheaply from someone closing down in Albury. There was also one yellow lounge with chrome legs which looked more expensive than the cheap looking suites. He recalled that all of the lounges arrived at the same time.
  1. Mrs Davis swore in her affidavit filed on 22 July 2005:

“Neither my husband or I have any recollection of how the furniture was sourced or paid for, but my husband and I are in possession of one of the two seater lounges referred to in the invoice.  These two seater lounges were not in City Hall when we first took possession of it and were acquired and installed in the premises by us during the renovation phase.  When we retook possession of City Hall in May 2003, my husband and I retained one of the couches.  Now produced and shown to me and marked “DSD-1” is a true copy of the tag, which I have removed from that couch and handed to my solicitors for the purposes of this Affidavit.”

  1. Mrs Davis agreed in cross-examination however that she was the person who had dealings with Flair 500.
  1. Whilst she may have had a tag from a Flair 500 lounge, there is no doubt in my mind that the invoice which was disclosed in the defendants’ list of documents was not genuine. It did not come from Flair 500 but was created by Mr or Mrs Davis with the knowledge of the other to bolster their case in the principal litigation.

5.Bits & Pieces Fabrics

  1. Document R.151 in the defendants’ list of documents appeared to be a tax invoice dated 7 November 2001 purporting to show a cash sale of 100 navy table mats for $500.00 in total. The invoice is in the name of Bits & Pieces Fabrics at Wodonga (the “Bits & Pieces Invoice”). Alison Noonan is the owner and operator of a business known as Hobby Sew at the address given for Bits & Pieces Fabrics on the invoice, that is 161 High Street Wodonga, Victoria 3690. She deposed that she purchased the business in May 2000 when the business name was Bits & Pieces Fabrics. The business name is still registered to her. She viewed the invoice and was emphatic that it was not one of her invoices. She said she had not dealt with the first defendant and further said “we do not and have never (while I have owned the business) sold table mats.”  As with the other principals of the businesses from whom the invoices the subject of this charge purportedly came, she was not required for cross-examination.
  1. In her affidavit sworn on 23 November 2005, Mrs Davis said:

“I have read the affidavit of Alison Noonan sworn 26 July 2005.  I recall going to Wodonga to look at cake shops and bakeries in order to get ideas for the café.  I recall going to Valentine’s bakery.  After leaving there, I walked past a fabric shop and went into it to look at fabrics.  I recall asking the woman working there about some fabric and whether table mats could be made from it.  She replied that it would be.  We discussed an order and about a week later I returned to the shop to collect the mats that had been made.  I paid in cash and was given the invoice that has been disclosed.”

  1. I am satisfied that the Bits & Pieces Invoice is false and was created by one of the second defendants with the knowledge of the other to fraudulently assist in their conduct of the proceedings.

6.Sommer’s Carpets

  1. The document listed at R.153 of the defendants’ list of documents is apparently a typed “Tax Invoice” in the name of Sommer’s Carpets (the “Sommer’s Carpets invoice”). It appears to record the cash purchase of “4 all weather mats non-slip tread for commercial use.” The total price is said to be $1,029.60.
  1. Mr Schmutter, the manager of Sommer’s Carpets swore an affidavit in which he said that the Sommer’s Carpets invoice was not a genuine invoice and that Sommer’s Carpets did not supply the goods listed in that invoice to the Albury/Wodonga business.
  1. In paragraphs 40 to 41 of Mr Davis’s affidavit filed 22 July 2005, he swore that in November 2001, Rod Keogh, the male Fifth Plaintiff, was in charge of operating the kitchen at City Hall. It was, he said, Mr Keogh’s responsibility to care for the kitchen area to ensure that it worked smoothly, which included the purchasing of items needed to do so. Mr Keogh deposed, and I accept, that he was employed as the head chef at the first defendant’s Albury/Wodonga business from August 2001 until late October 2002 when the first plaintiff purchased the Albury/Wodonga business from the first defendant. Thereafter Mr Keogh was employed by the first plaintiff as manager.
  1. Mr Davis said he was approached by Mr Keogh in or about November 2001 who told him that he needed non-slip mats for the kitchen area; that he had researched what mat would be most suitable; a place where they could be purchased; and the price. Mr Davis said he gave Mr Keogh the necessary cash to purchase the mats and that Mr Keogh handed him an invoice, which he thought was probably the same as the document listed at R.153 in the defendants’ list of documents, the Sommer’s Carpets invoice. Mr Davis said he recalled noticing non-slip mats in the kitchen area after November 2001.
  1. Mr Keogh swore in an affidavit filed on 3 August 2005 that the contents of paragraph 41 of Mr Davis’s affidavit were untrue. The conversation to which Mr Davis deposed did not take place. He did not give Mr Keogh cash for the purchase of mats. Mr Keogh said while there were mats behind the bar and outside the kitchen area, there were no mats in the kitchen area. The mats behind the bar and outside the kitchen areas were hired from Ensign Services (Aust) Pty Ltd in Melbourne. They were never purchased.
  1. Joao Desheves, another employee of the first defendant from the time it commenced to operate the Albury/Wodonga business until Christmas 2002, also gave sworn evidence by affidavit that there were no mats in the kitchen area at any time when he was employed there. Neither Mr Keogh or Mr Desheves were required for cross-examination.
  1. This was another invoice fabricated by the second defendants.
  1. The Lighting Shop
  1. The invoice listed at R.170 in the defendants’ List of Documents is apparently an invoice from The Lighting Shop (“The Lighting Shop invoice”) for a cash sale for one reception desk lamp in the amount of $480.00. Manfred Muller, who is also known as Charlie Muller, is the director of M H & E Muller Pty Ltd trading as the Lighting Shop. Mr Muller has sworn in an affidavit filed on 29 August 2005 that the Lighting Shop invoice did not come from him. The cash sale computer invoice which his business issues has a totally different logo, address and phone numbers. It would have been in that form had it in fact come from the Lighting Shop.
  1. Mr Keogh swore in his affidavit filed on 5 August 2005 that there was only one lamp at reception. The base was in the shape of “a statue of a small Negro type person.” Mrs Davis told Mr Keogh that it was hers and she had brought it from home.
  1. Mrs Davis swore in her affidavit filed on 22 July 2005:

“Neither my husband or I can recall the circumstances in how the reception desk lamp was sourced or paid for but I specifically recall this lamp at reception as it was the area in which I worked.   That desk lamp was not amongst the items that were at City Hall when we first took possession of it.”

  1. She agreed in cross-examination that she was the person who had dealings with this supplier. In her affidavit sworn on 23 November 2005, Mrs Davis said:

“5.Document R170/”LMK177” concerns the purchase of a lamp.  In my affidavit of 21 July 2005 I state that I then had no real recollection of the purchase of the lamp.  Having considered the matter further I am able to say that the invoice that has been disclosed was given to Greg and I when we made the purchase.  As I recall, the store from which we bought the lamp was the closest lighting shop to City Hall, perhaps only 3 kilometres away from the business and we had visited it, together, one afternoon in the weeks before Christmas 2001.” 

  1. This story was untrue. Like the others, this invoice was a forgery.
  1. Acril Convex Pty Ltd
  1. The document listed at R.175 in the defendants’ list of documents is apparently a typed invoice from Acril Convex Pty Ltd (the “Acril Convex invoice”) for four made to order mirrors, chrome edged with commercial grade glass in the amount of $1,430 on which there is the handwriting “Paid in Full” which appears to be followed by a signature.
  1. Mrs Davis swore in her affidavit filed 22 July 2005:

“12.I have read paragraph 16 and exhibit “JST-6” of the Affidavit of Jason Tewson and I have read a copy of the invoice which is exhibit “LMK-178”.  I cannot explain why that business denies the invoice was not issued by them.  However, I do recall how these mirrors were sourced and paid for. 

  1. In early January 2002 I recall a good looking man coming into City Hall one day and ordering a coffee.  He was by himself.  He seated himself in the lounge area and started drinking his coffee.  I went over and sat down on one of the couches next to him and spoke to him over a coffee.  During the conversation I asked what he was doing in Albury.  He informed me that he was a mirror salesman and was in town on business.  I told him that was interested in mirrors for the toilets.  He indicated that he would be able to provide them.  I then took him on a tour of the premises and showed him where I wanted the mirrors to go in the toilets.  He took some measurements and told me that he would be able to provide me with a special price.  Several days later I arrived at work at City Hall one mid morning (probably the date of the invoice, which is 15 January 2002) and I noticed that the mirrors had been delivered.  I asked Dean Murdoch who had delivered the mirrors.  Dean told me that a man had delivered the mirrors earlier that morning and that he said he would come back later that day for payment.  A few hours later, the same man that I spoke to on the earlier occasion arrived at City Hall and approached me for payment.  He handed me the invoice which is exhibit “LMK-178” and I paid him in cash for the mirrors.”
  1. Mrs Davis’s version was supported in part by Mr Murdoch who swore in his affidavit filed on 22 July 2005 that he did not have any personal knowledge of the actual supplier or the cost of supplying the mirrors, however he recalled that in January 2002, several chrome edged mirrors were delivered to the Albury/Wodonga business. Mr Murdoch said he greeted the male person who delivered the mirrors. That man had asked for Mrs Davis but Mrs Davis was out. The man enquired about payment and Mr Murdoch told him he would have to wait until Mrs Davis returned. The man left the mirrors with Mr Murdoch and Mr Murdoch told Mrs Davis on her return that the man would be returning shortly for payment. He recalled the man returning and speaking with Mrs Davis. Mr Murdoch was silent on the subject of an invoice.
  1. Robert Dolby is the Managing Director of Acril Convex and has sworn an affidavit in this matter which was filed on 5 August 2005. He deposes that Acril Convex has three employees, himself, his wife and occasionally his daughter and he is therefore fully aware of all events in relation to Acril Convex. His company manufactures convex safety mirrors from acrylic polycarbonate and the stainless steel materials. It has no trading accounts and has never had any for the supply of glass products. Acril Convex does not deal in any glass products at all. All of the mirrors of Acril Convex are convex (not flat) in shape and are predominately made of acrylic or polycarbonate or stainless steel. He swears that the material on the invoice which is correct is the company name and its free call telephone number is consistent with what is contained in the Yellow Pages directory publicly available. The ABN which is shown on the invoice (ABN 60 889 218 396) is “patently incorrect and is not a registered ABN”. Mr Dolby swears that his company does not manufacture or sell mirrors of the type described and that his company has had no dealings with the first defendant or Mrs Davis. He swears that the information contained in his response to the plaintiffs’ solicitor is true where he says:

“I have no knowledge of any invoice nor have we dealt with any persons relating to [it].  The invoice as provided by you did not come from us, does not have our ABN number or our address.  Furthermore we do not deal in glass mirrors but supply only convex safety mirrors.  We have had no dealings with City Hall Albury Wodonga Pty Ltd to my knowledge.

The invoice was not issued by Acril Convex Pty Ltd”

  1. There is no reason to doubt Mr Dolby’s version which is patently correct. The invoice is a forgery and Mrs Davis must have known that. There is no person who had any interest in creating the invoice other than the second defendants.

9.Mid States Appliances

  1. Document R.179 was what purported to be on invoice from Mid States Appliances, 435 Dean Street, Albury. It was dated 5 February 2002 and was for four items of electrical equipment; 1 Sunbeam electric mixer, 1 Sunbeam kitchen whizz [sic], 1 Sunbeam juicer and 1 Sunbeam 6 slice toaster.  The total price was $1,130.80.  When asked by the plaintiffs’ solicitor about the accuracy and source of the invoice, Barry Mott, the director of the business Mid States Small Appliances Sales & Service, replied in writing:

“PLEASE NOTE THE INVOICE FAXED TO US 21.1.05 IS NOT OUR INVOICE. 

ITEM SUNBEAM WIZZ – THE WIZZ IS MADE BY BREVILLE NOT SUNBEAM. 

ITEM SUNBEAM DO NOT MAKE A 6 SLICE TOASTER.  MID STATES HAVE NEVER STOCKED A SIX SLICE TOASTER. 

THE PHONE AND FAX NUMBER ON THIS INVOICE ARE CORRECT – THE REST IS NOT.”

The address given on the invoice was not the address of the business used by Mr Mott. 

  1. Mr Mott subsequently swore an affidavit that the contents of his letter were true and correct. He was not required for cross-examination.
  1. In paragraph 42 of his affidavit filed on 22 July 2004, Mr Davis said that he could not explain the statements contained in the handwritten letter from Mr Mott to the Plaintiffs’ solicitors. He said he had no recollection of any transaction with “Midstate [sic] Appliances” in February 2002.  He said that Rod Keogh was responsible for the kitchen at City Hall.  He said that he recalled that on innumerable occasions Mr Keogh told him that kitchen appliances had broken and needed to be replaced or repaired.  He said that Mr Keogh would be handed the necessary cash to purchase the items and he would return with an invoice, together with any change that might have resulted from the transaction. 
  1. Mr Keogh emphatically denied those allegations in an affidavit filed on 3 August 2005. He said that Mr Davis had never handed him cash to purchase appliances for the kitchen. None of the appliances listed in the invoice were present in the kitchen at any time when Mr Keogh was working at the Albury/Wodonga business. There were three mixers and one blender: a Hobart commercial flour mixer, a kitchen aide, a Kenwood Chef mixer and a Robocoupe commercial blender. What Mr Keogh said was clearly true, not least because it was wholly supported by evidence from Mr Desheves who also worked in the kitchen at the Albury/Wodonga business at the relevant time.
  1. Mr Davis’s dishonest explanation was an unsuccessful attempt to cover up the fact that this invoice was, to his knowledge, false.

Summary of invoices

  1. Only Mr and Mrs Davis had an interest in falsifying the documents. The false documents were intended to prove that they had expended money on the Albury/Wodonga business. Mr Davis agreed in cross-examination that proving that he received invoices and paid for plant and equipment in the Albury/Wodonga business was critical to his defence of the principal litigation. Both Mr and Mrs Davis were involved in and responsible for the creation of these false invoices which they then disclosed as if they were genuine. I am satisfied beyond reasonable doubt that charge 11 has been proved against both Mr and Mrs Davis.

Penalty

  1. The second defendants admitted eight separate breaches of the undertaking given by them to the court on 25 March 2004 and apologised to the court and to the plaintiffs for those breaches. The explanation given by Mr Davis was that at the time of making each payment the prohibition created by the undertaking was not at the forefront of his mind. He did not seek legal advice before making any of the payments and focused only on meeting debts that he felt bound to pay. He said he found the proceedings very stressful and that his judgement was clouded by that.
  1. In oral evidence, Mr Davis said he did not think an undertaking not to remove assets out of Australia would prevent him paying debts. He said he did not regard his money as an asset if he owed money to a creditor. By making the admissions, he accepted that he had been wrong about that.
  1. These explanations do not however deal with, or in any way, excuse the grave breaches which I have found.
  1. Mr Davis has deposed that he is 49 years of age, does not have a criminal record and has never before been in contempt of court. He resides with his wife and her daughter from a previous marriage and her elderly parents, Mr and Mrs Cairns. Mr Cairns suffers from dementia and Mrs Cairns from emphysema and high blood pressure. Mr and Mrs Cairns are dependent upon the full time care which is provided by Mr and Mrs Davis.
  1. He deposed that throughout his marriage he has taken principal responsibility for any financial decisions. Whilst decisions made by him and his wife are joint decisions, he said that it is his advice and direction that has dictated them. He has been responsible, he says, for the greater part of his wife’s understanding of financial and legal matters. He deposed he has taken responsibility for the actions of both of them in making the payments and the activities referred to which are in breach of the undertakings.
  1. Mrs Davis likewise swore that during the course of their marriage, she relied on advice from her husband about their financial affairs and legal matters. She said that in respect of each of the payments referred to in his affidavits and in respect of the matters concerning the disclosure of documents, those actions were generally undertaken by Mr Davis. However, she said that that did not mean that things were done without consultation with her or without her knowledge or that she was not responsible for them. She said it was not her intention to breach the undertakings given to the court by participating in the conduct referred to. She apologised to the court and to the plaintiffs for the contempt to which she admitted.
  1. In mitigation of penalty she said that she and her husband lived with her elderly parents and her 22 year old daughter. She has no criminal record and has not been previously in contempt of court. Her father is 76 years old, suffers from dementia and is frail and dependant. Mrs Davis deposed that because of her mother’s health problems, she was in effect her father’s primary care giver and assisted him on a daily basis with such things as dressing, showering, preparation of meals, washing and ironing, cleaning, travel and in the management of his medication.
  1. Mrs Cairns is 75 years old and suffers from emphysema and high blood pressure. She is also dependent although she does not need assistance showering and dressing but she is dependant on Mrs Davis to do her washing and ironing, cleaning, providing her with transport and in the management of her medication. Mrs Davis said that in the past Mrs Cairns has accompanied her on shopping trips and the like but recently (the affidavit was dated 21 November 2005) due to poor and deteriorating health, she has done so less and less. There is no mention by Mrs Davis, of Mrs Cairns’s capacity to go gambling with her three to four days a week sufficiently often to lose hundreds of thousands of dollars.
  1. Mrs Davis said that she accompanied both her parents when visiting the doctor and it was usual for her to participate in the consultation.

Costs

  1. It is common, although not the invariable practice in such cases, to order the respondents to pay the applicants’ costs on an indemnity basis.[21]  That is the costs order that I intend to make in this case.  In view of the deliberate flouting by the respondents of undertakings given to the court, no other order for costs would sufficiently sanction the second defendants’ behaviour.[22]

Punishment

  1. Rule 930 of the UCPR provides that if the court decides that the respondent has committed a contempt and the respondent is an individual, the court may punish the individual by making an order that may be made under the Penalties and Sentences Act 1992.  Rule 930(4) provides that the court may make an order for punishment on conditions, including, for example, a suspension of punishment during good behaviour, with or without the respondent giving security satisfactory to the court for good behaviour.  If the court determines that the respondent should be imprisoned, rule 931(1) provides that the order may specify the prison in which the respondent is to be imprisoned.  Rule 931(2) provides that if the respondent is in prison for a term, the court may order the respondent’s discharge from prison before the end of the term. 
  1. As Wilson J held in ASIC v First State Home Loans Pty Ltd[23] the nature of the intent, if any, with which the person breached their undertaking will be relevant to the penalty.  In this case, it is particularly important to vindicate the authority of the court.  When an undertaking is given by a person to the court then it is essential to the machinery of justice that that undertaking be complied with.  If a person finds that they will be unable to comply with an undertaking then they must make an application to the court to vary the undertaking.  The court must punish contemnors in a case such as this in the public interest. 
  1. The breaches of the express undertakings and the creating of false documents which were disclosed as if they were genuine was a deliberate course of conduct which was engaged in for the most discreditable of reasons. The second defendants made undertakings to the court and then deliberately breached them for the purpose of avoiding the plaintiffs’ claim. The creation and disclosure of false documents was designed to mislead the plaintiffs and the court in such a way as to pervert the course of justice.
  1. Because of the bankruptcy of the second defendants it is not possible to order a fine. In any event, contumacious breaches of undertakings given and the implied undertaking owed to the court not to disclose documents which have been falsely created for the purpose of disclosure require condign punishment by imprisonment rather than fine.
  1. I find that Gregory James Davis and Deborah Susan Davis have committed contempt of court as set out in these reasons. Gregory James Davis is ordered to serve four months’ imprisonment and Deborah Susan Davis is ordered to serve two months’ imprisonment. The second defendants are ordered to pay the costs of the plaintiffs’ of and incidental to the application on an indemnity basis.

Footnotes

[1] [2001] QSC 414 at [5]-[8].

[2] See Arlidge, Eady & Smith On Contempt 2nd Edition, 1999, Sweet and Maxwell at [1–2].

[3] (1348) YB 22 Edward III, p 13, pl 26.

[4] Coram Rege roll, H. 22 Edward III, m 103.

[5] Davis’s Case (1461) 2 Dyer 188; 73 ER 415.

[6] Coram Rege roll, T 30 Edward I, m 9d.

[7] (1323) Coram Rege roll, M. 17 Edward II, m 16d; (1398) Cal Pat Rolls, 22 Richard II, 427.

[8] (1317) Coram Rege roll, T. 11 Edward II, m 48.

[9] (1293) Coram Rege roll, P. 21 Edward I, par i, m 95 (Solly-Flood), William de Bereford J.

[10] Arlidge, Eady & Smith [supra] at [1-47] – [1-50].

[11] [1972] 2 QB 52 at 61.

[12] Jennison v Baker (supra) at 69.

[13] (1964) Ch 195.

[14] (1995) 183 CLR 525 at 533.

[15] (supra) at 530.

[16] (1987) 164 CLR 15 at 49.

[17] Australasian Meat Industry Employees’ Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 111; Madeira v Roggette Pty Ltd [1990] 2 Qd R 357 at 363, 366; Stewart v Gymboree Pty Ltd [2001] QCA 307, CA No 8947 of 2000, 3 August 2001 at [35]; Evenco P/L v Aust Bldg Cons Employees & Builders Labourers Federation (Qld Branch) & Ors [2000] QCA 108, CA NO 3536 of 1999 & 3610 of 1999, 14 April 2000 at [32].

[18] [1983] 1 AC 280.

[19] Harman v United Kingdom (1985) 7 EHRR 146.

[20] On 1 October 1987, RSC O24 r14A came into effect in England: “Any undertaking, whether express or implied, not to use a document for any purposes other than those of the proceedings in which it is disclosed shall cease to apply to such document after it has been read to or by the Court, or referred to, in open Court, unless the Court for special reasons has otherwise ordered on the application of a party or of the person to whom the document belongs.”

[21] Evenco P/L v Aust Bldg Cons Employees & Builders Labourers Federation (Qld Branch) & Ors [2000] QCA 108, CA No 3536 of 1999 and 3610 of 1999, 14 April 2000.

[22] Stewart v Gymboree Pty Ltd [2001] QCA 307, CA No 8947 of 2000, 3 August 2001 at [36].

[23] [2002] QSC 55 at [4].

Close

Editorial Notes

  • Published Case Name:

    City Hall Albury Wodonga Pty Ltd & Ors v Chicago Investments Pty Ltd & Ors

  • Shortened Case Name:

    City Hall Albury Wodonga Pty Ltd v Chicago Investments Pty Ltd

  • MNC:

    [2006] QSC 31

  • Court:

    QSC

  • Judge(s):

    Atkinson J

  • Date:

    02 Mar 2006

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98
2 citations
Jump To
Cite 1 - (1986) 161 CLR 98
Cite 2 - (1986) 161 CLR 98
Australian Securities and Investments Commission v 1st State Home Loans Pty Ltd [2002] QSC 55
2 citations
Jump To
Cite 1 - [2002] QSC 55
Cite 2 - [2002] QSC 55
Bakir v Doueihi [2001] QSC 414
2 citations
Jump To
Cite 1 - [2001] QSC 414
Cite 2 - [2001] QSC 414
Davis’s Case (1559) 2 Dyer 188
1 citation
Jump To
Cite 1 - (1559) 2 Dyer 188
Evenco Pty Ltd v Australian Building Construction Employees and Builders Labourers Federation (Qld Branch)[2001] 2 Qd R 118; [2000] QCA 108
3 citations
Jump To
Cite 1 - [2000] QCA 108
Cite 2 - [2000] QCA 108
Cite 3 - [2000] QCA 108
Harman v Secretary of State for the Home Department (1983) 1 AC 280
2 citations
Jump To
Cite 1 - (1983) 1 AC 280
Cite 2 - (1983) 1 AC 280
Harman v United Kingdom (1985) 7 EHRR 146
2 citations
Jump To
Cite 1 - (1985) 7 EHRR 146
Cite 2 - (1985) 7 EHRR 146
Hinch v Attorney-General (Victoria) (1987) 164 CLR 15
2 citations
Jump To
Cite 1 - (1987) 164 CLR 15
Cite 2 - (1987) 164 CLR 15
Jennison v Baker [1972] 2 QB 52
2 citations
Jump To
Cite 1 - [1972] 2 QB 52
Cite 2 - [1972] 2 QB 52
Madeira v Roggette Pty Ltd [1990] 2 Qd R 357
2 citations
Jump To
Cite 1 - [1990] 2 Qd R 357
Cite 2 - [1990] 2 Qd R 357
Phonographic Performance Ltd v Amusement Caterers (Peckham) Ltd (1964) Ch 195
2 citations
Jump To
Cite 1 - (1964) Ch 195
Cite 2 - (1964) Ch 195
Stewart v Gymboree Pty Ltd [2001] QCA 307
3 citations
Jump To
Cite 1 - [2001] QCA 307
Cite 2 - [2001] QCA 307
Cite 3 - [2001] QCA 307
Witham v Holloway (1995) 183 CLR 525
2 citations
Jump To
Cite 1 - (1995) 183 CLR 525
Cite 2 - (1995) 183 CLR 525

Cases Citing

Case NameFull CitationFrequency
Commissioner for Fair Trading v TLC Consulting Services Pty Ltd [2011] QSC 374 2 citations
Dubois v Rockhampton Regional Council [2014] QCA 2153 citations
Emmanuel College v Rowe [2014] QSC 2383 citations
Lade & Co P/L v Black[2006] 2 Qd R 531; [2006] QCA 2944 citations
Queensland Building & Construction Commission v van Uden (No. 2) [2021] QDC 1622 citations
Remely v Vandenberg [2010] QCA 2142 citations
Rockhampton Regional Council v Dubois [2014] QPEC 132 citations
1

Require Technical Assistance?

Message sent!

Thanks for reaching out! Someone from our team will get back to you soon.

Message not sent!

Something went wrong. Please try again.