Commissioner for Fair Trading v TLC Consulting Services Pty Ltd
[2011] QSC 233
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- Notable Unreported Decision
- Commissioner for Fair Trading v TLC Consulting Services Pty Ltd[2011] QSC 233
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Commissioner for Fair Trading v TLC Consulting Services Pty Ltd[2011] QSC 233
Commissioner for Fair Trading v TLC Consulting Services Pty Ltd[2011] QSC 233
SUPREME COURT OF QUEENSLAND
CITATION: | Commissioner for Fair Trading v TLC Consulting Services Pty Ltd & Ors [2011] QSC 233 |
PARTIES: | DAVID KENNETH FORD in his capacity as Commissioner for Fair Trading pursuant to s 19 of the Fair Trading Act 1989 (Qld) |
FILE NO: | 2829 of 2003 |
DIVISION: | Trial Division |
PROCEEDING: | Application |
ORIGINATING COURT: | Supreme Court of Queensland |
DELIVERED ON: | 11 August 2011 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 19-21 July 2011 |
JUDGE: | Philippides J |
ORDER: | The third respondent is guilty of contempt in that she breached the Order of Atkinson J dated 30 April 2003 |
CATCHWORDS: | PROCEDURE – CONTEMPT – BREACH OF COURT ORDERS – BREACH OF UNDERTAKING TO COURT – application seeking punishment for contempt of court – where respondent a party to a consent order permanently restraining her from carrying on the business of providing introduction services – where respondent not served with the order – whether respondent received notification of the order for the purposes of r 904(2)(b) UCPR – whether respondent acted in contravention of the order – where after the consent order was made the respondent became the sole shareholder and director of a company which in turn was the sole shareholder of the company Love Network Qld Pty Ltd – where Love Network Qld Pty Ltd operated in Queensland to provide introduction services – whether Love Network Qld Pty Ltd was a sham or device used by the respondent to circumvent the prohibition imposed on the respondent by the order – whether respondent guilty of contempt Introduction Agents Act 2001 (Qld) Uniform Civil Procedure Rules 1999 (Qld), r 898; r 904; r 930 Penalties and Sentences Act 1992 (Qld) Ace Property Holdings Pty Ltd v Australian Postal Corp [2010] QCA 55, cited Artedomus v del Casale [2006] NSWSC 146, considered Australian Competition and Consumer Commission v Dynacast (Int) Pty Ltd [2007] FCA 429, cited Australian Securities Commission v Macleod [No 1] (1993) 40 FCR 155, considered Bakir v Doueihi [2001] QSC 414, cited Bakir v Doueihi [2002] QSC 19, cited Campbelltown City Council v Toth [2005] NSWLEC 89, cited Douglas v Douglas [1978] Qd R 75, cited Equuscorp Pty Ltd v Glengallen Investments Pty Ltd [2004] HCA 55, cited Foley v Herald Sun TV Pty Ltd [1981] VR 315, cited Gilford Motor Company Ltd v Horne [1933] 1 Ch 935, cited Hafele Australia Pty Ltd & Anor v Maggbury Pty Ltd & Anor [2000] QCA 397, cited Jones v Lipman [1962] 1 WLR 832, cited Kensington International Ltd v Congo [2005] EWHC 2684, considered Kirkpatrick v Kotis (2004) 62 NSWLR 567, cited Macleod v Australian Securities Commission [1993] FCA 379, considered Madeira v Roggette Pty Ltd [1990] 2 Qd R 357, cited Madeira v Roggette Pty Ltd [No 2] [1992] 1 Qd R 394, cited O'Connor v Stevenson (1990) 21 FCR 344, distinguished Official Assignee as Assignee of the Bankrupt Estate of Armitage v Sanctuary Propvest Ltd [2009] NZHC 1783, cited Pickersgill and Harvey v Tsoulkalas [2009] SASC 357, cited R v Fletcher; ex parte Kisch [1935] HCA 1, cited Raftland Pty Ltd v Commissioner of Taxation [2006] FCA 109, cited Re Intex Consultants Ltd (1986) 2 Qd R 99, cited Saloman v A. Saloman & Co Ltd [1987] AC 22, cited Sun Newspapers Ltd v Brisbane TV Ltd (1989) 92 ALR 535, cited United Telephone Company v Dale (1884) 25 Ch D 778, cited |
COUNSEL: | D Fraser QC with E Morzone for the applicant No appearance for the third respondent |
SOLICITORS: | Crown Law for the applicant No appearance for the third respondent |
The application
- The applicant (the Commissioner for Fair Trading) brings this application for an order that the third respondent (Helen Angela Dimitrijevski) be punished for contempt for her breach of the order made by Atkinson J on 30 April 2003 (“the Order”), which restrained the third respondent from carrying on the business of “introduction services”, such business including “providing introduction services in Queensland”.
- The Order, which was made by consent, between the applicant and the first respondent (TLC Consulting Services Pty Ltd), the second respondent (Zivko Dimitrijevski) and third respondent provided, inter alia, as follows:
“1.The First, Second and Third Respondents by themselves, their servants and/or agents, and/or representatives be restrained permanently, from carrying on the business of offering to find, or finding persons to be introduced, or introducing persons to others (‘introduction services’), such business including:
(a)providing introduction services to persons resident in Queensland other than to persons who are parties to existing contracts for the provision of such services by the First Respondent;
(b)accepting payment or other consideration for such introduction services from persons residing in Queensland whether under existing contracts or otherwise including accepting any further payment or other consideration from persons who are parties to existing contracts for the provision of introduction services by the First Respondent;
(c)making available to persons, wherever located, information concerning persons available to be introduced who reside in Queensland, other than to persons who are parties to existing contracts for the provision of such information by the First Respondent;
(d)introducing to persons, wherever located, persons resident in Queensland; other than persons who are parties to existing contracts with the First Respondent for the introduction of themselves to other persons;
(e)entering into contracts with persons resident in Queensland for the provision of introduction services.
(‘providing introduction services in Queensland’)
- The orders in paragraph 1 above commence to operate 7 days from the date these orders are made.
- The First, Second and Third Respondents pay to the Applicant the following sums:
(a)$396,111.00 by way of compensation pursuant to section 100 (5) (d) of the Fair Trading Act 1989 (Qld);
(b)$37,500.00 by way on interest on the amount of $396,111.00.
The combined amount of $433,611.00 shall be paid within 120 days from the date of this order, the liability for such payment being joint and several.
…
- The First, Second and Third Respondent pay the Applicant within 120 days of the date of this order costs fixed in the amount of $130,000.00. ”
- By this application, the applicant alleges that the third respondent has breached the Order.
Particulars of breach
- The particulars of the alleged breach as outlined in the amended application are as follows:
“4.At all material times:
(a)The Third Respondent was the sole shareholder, sole director and secretary of a company Southport Central Property Pty Ltd ACN 126 593 619.
(b)Southport Central Property Pty Ltd was the sole shareholder of a company Love Network Qld Pty Ltd ACN 130 509 634.
(c)Southport Central Property Pty Ltd owned premises known as suite 2808 2806 at the Southport Central Building.
(d)Southport Central Property Pty Ltd owned premises known as suite 2807 at the Southport Central Building adjacent to Southport Central Building suite 2806.
(e)Love Network Qld Pty Ltd occupied premises at the Southport Central Building in suite 2808 adjacent to Southport Central Building suite 2807.
- In about June 2008 a computer network was set up in suites 2806, 2807 and 2808 (together “the premises”) for and on the instructions of the Third Respondent.
- On or about 6 June 2008 Love Network Qld Pty Ltd was granted an Introduction Agents Licence, No 3232382, under the Introduction Agents Act 2001.
- In On or about March April 2009 a business of “introduction services” “providing introduction services in Queensland” within the meaning of those expressions as defined in paragraph 1 of the orders (the “Business”) commenced to operate from the premises or part thereof.
- The Business traded under the name Love Network.
- The Business was operated by Love Network Qld Pty Ltd.
- The Business:
(i)Provided introduction services to (inter alia) the persons specified in Schedule 1 hereof who were resident in Queensland and who were not persons who were parties to “existing contracts” within the meaning of that expression in paragraph 1(a) of the order.
(ii)Accepted payment for such introduction services from (inter alia) the persons particularised in Schedule 1 hereof.
(iii)Made available to (inter alia) the persons particularised in Schedule 1 hereof who were resident in Queensland and who were not persons who were parties to “existing contracts” within the meaning of that expression in paragraph 1(c) of the order, information concerning persons available to be introduced who resided in Queensland.
(iv)Introduced to (inter alia) the persons particularised in Schedule 2 hereof persons who were resident in Queensland and who were not persons who were parties to “existing contracts” within the meaning of that expression in paragraph 1(d) of the order.
(v)Entered into contracts with (inter alia) the persons particularised in Schedule 1 hereof for the provision of introduction services, such contracts being particularised in Schedule 1 hereof.
- In each case the activities set out in paragraph 10 hereof occurred more than 7 days after 30 April 2003.
- Love Network Qld Pty Ltd utilized the computer network referred to in paragraph 5 hereof to carry out the Business.
- The Third Respondent:
(a)Made the premises available for the Business.
(b)Arranged for the said Introduction Agents Licence to be obtained for the Business.
(c)Arranged for a database of potential customers to be provided for the use of the Business.
(d)Engaged in the hiring and firing of employees for the Business.
(e)Arranged for payment of remuneration to employees and agents of the Business.
(f)Directed employees as to when leave could be taken.
(g)Directed and supervised the employees and agents of the Business in providing the introduction services as aforesaid.
(h)Participated in the provision of introduction services to customers or potential customers of the Business namely including Jamie Humphries, Robert Ray Pearce, John O'Connor, Ruth McGee, Baz Tafalis, and Ian Douglas Besch, David George McKay, David Andrew Preuseker and Andrew James Neal, between in or about March 2009 and August 2009.
(i)Procured persons to accept appointment as officers of Love Network Qld Pty Ltd on the basis that they acted as the Third Respondent directed.
Particulars of officers
(a)Michelle Jude as director from 7 April 2008 until 28 April 2008.
(b)Michelle Jude as secretary from 7 April 2008 until 28 April 2008.
(c)Kylie Louise Wade as director from 1 May 2008 until 28 July 2009.
(d)Kylie Louise Wade as secretary from 1 May 2008 until 28 July 2009.
(e)Kelsie Lawson Smith as director from 28 July 2009 and as secretary from 20 July 2009.
- The Third Respondent controlled the income and expenditure of the Business.
- Love Network Qld Pty Ltd was utilised by the Third Respondent through Southport Central Property Pty Ltd in order to permit the Business to be carried on by the Third Respondent through Love Network Qld Pty Ltd as her alter ego by way of a device to avoid the Third Respondent’s obligations under paragraphs 1 and 2 of the said orders.
Particulars
(a)The Applicant relies upon the matters set out in paragraphs 4-14 hereof.
(b)The Third Respondent was at all material times aware that she was bound by the orders as aforesaid and would not be able to obtain an Introduction Agents Licence under the Introduction Agents Act 2001 for herself or through any company of which she was an officer.
(c)The Third Respondent wishes to continue, notwithstanding the orders, to engage in carrying on business of providing introduction services in Queensland, as it was extremely lucrative for her.
(d)The Third Respondent instructed employees of the Business to lie to third parties and employees of Love Network Qld Pty Ltd, and advise that she had no involvement at all with the Business.
(e)The Third Respondent used false names including “Helena”, “Vivian”, “Kimberley”, and “Victoria” and “Angelina” when engaging in activities as part of the Business.
Schedule 1
(a)Ian Douglas Besch:
(i)$1295 date of contract 1 April 2009
(ii)$5500 date of contract 9 April 2009
(iii)$6590 date of contract 27 April 2009
(iv)$15,704.32 date of contract 12 June 2009
(b)Robert Ray Pearce: $699 date of contract on or about 1 July 2009
(c)Jamie Humphries:
(i)$495 date of contract 10 August 2009
(ii)$20,000 $29,000 date of contract 14 August 2009
- Andrew James Neal
(i)$6590 date of contract on or about 7 April 2009
(ii)$55,000 date of contract 23 April 2009
- David George McKay
- $450 date of contract on or about 11 May 2009
- David Andrew Preusker
Schedule 2
(a) Ian Douglas Besch:
(i) $5500 date of contract 9 April 2009
(b) David George McKay
(c) Robert Roy Pearce
(d) Andrew James Neal
(e) David Andrew Preusker.”
Background
- For convenience I shall refer to the third respondent as “the respondent”.
- The application was initially listed for hearing on Thursday 17 March 2011. On that date, the applicant indicated that it was understood that the respondent had been admitted to the Tweed Heads Hospital and that the hospital’s file had been subpoenaed. There was no appearance by the respondent but during the course of the day an email was received from the psychiatric registrar of the Tweed Heads Hospital stating that the respondent was an in-patient. Clarification was sought as to when she was required in Court. Upon receipt of the email, the matter was adjourned to the following day so that the applicant’s solicitors could contact the hospital.
- On Friday 18 March 2011, the applicant advised that it had contacted the respondent’s treating psychologist, Dr Fuller and that he was able to give an update on the respondent’s situation. The Court heard from Dr Fuller by telephone link. He stated that the respondent had been admitted as an involuntary patient on the basis of a diagnosis of major depression but that she was currently a voluntary patient and that it was planned to discharge her on the following Monday (21 March 2011). Dr Fuller indicated that the respondent was able to attend Court on Monday and that support could be provided to assist the respondent to do so. The matter was adjourned to Monday on that basis.
- On Monday 21 March 2011, the respondent attended Court. She indicated that she lacked legal representation. On that day, orders were made adjourning the matter to 20 July 2011 for hearing, with a timetable set for the respondent to file affidavit material and to identify which witnesses were required for cross-examination. The respondent also provided an email and a PO Box as addresses for service. A mention for the matter was scheduled for 1 June 2011.
- At the mention on 1 June 2011, the respondent did not appear. However, the applicant filed an affidavit exhibiting a facsimile dated 27 April 2011 that had been received from Dr Huntsman, the respondent’s then treating psychologist, which stated that:
“Given [the respondent’s] current clinical condition, I do not believe she could properly give instructions to a solicitor or adequately prepare her defence. I would also have concerns as to the potential for a serious deterioration in her mental state, given the stress of legal proceedings.
I would anticipate that with a satisfactory response to treatment she would be in a much improved position in relation to these matters in a further two months. I would therefore request that you give consideration to adjourning proceedings.”
The affidavit also exhibited the applicant’s solicitor’s response, which stated that Dr Fuller had given a different view on 18 March 2011 and that should the respondent seek an adjournment of the matter, she would need to make an application to the Court. No application for an adjournment was brought.
- On 20 July 2011, there was no appearance by the respondent, nor did the court receive any communication from her or from any medical practitioner in respect of any inability to attend court. No affidavit material had been filed on behalf of the respondent and no request had been made to the applicant to produce witnesses for cross-examination. The applicant indicated that inquiries of Dr Huntsman revealed that he had seen the respondent on 20 and 27 April and 11 May 2011, but had not had subsequent contact with her.
- The approach urged by the applicant was to proceed to determine the issue of whether the respondent was guilty of contempt as alleged and, depending on the decision of the Court, to leave the issue of punishment to a later time, so that the respondent could first be notified of the decision of the Court. That is the approach that I have adopted.
Material Facts
- The affidavit material relied upon by the applicant reveals the following:
(a)On or about 7 April 2008, a company, Love Network Qld Pty Ltd ACN 130 509 634, was incorporated.[1] The sole shareholder of that company was another company called Southport Central Property Pty Ltd ACN 126 593 619[2] of which the respondent was the sole shareholder, sole director and secretary.[3]
(b)On or about 6 June 2008, the respondent arranged for Love Network Qld Pty Ltd to apply for and to obtain Introduction Agents Licence No 3232382 under the Introduction Agents Act 2001.[4]
(c)At or about the same time, on the instructions of the respondent, a computer network was set up in Suites 2806, 2807 and 2808 at the Southport Central Building.[5] Two of the suites (Suites 2806 and 2807) in which the network was set up were owned by Southport Central Property Pty Ltd.[6] The third suite, Suite 2808, was occupied by Love Network Qld Pty Ltd.[7]
(d)The respondent also arranged for a data base of potential customers and hired employees for the business.[8]
- The applicant alleged that the computer network and premises established at the Southport Central Building were then utilised to carry on the business of providing “introduction services”. The business traded under the name Love Network. In support of the allegations pleaded in para 10 of the applicant’s amended application, setting out the particulars of the alleged breaches of the Order of Atkinson J, the applicant relied on affidavit material that the business:
- provided introduction services to Mr Besch,[9] Mr Pearce,[10] Mr Humphries,[11] Mr Neal[12] and Mr McKay[13] (persons specified in Schedules 1 and 2 to the amended application who were resident in Queensland and who were not persons who were parties to “existing contracts” within the meaning of that expression in para 1(a) of the Order).
- introduced to Mr Besch,[14] Mr McKay[15], Mr Pearce[16] and Mr Neal,[17] other persons who were resident in Queensland and who were not persons who were parties to “existing contracts” within the meaning of that expression in para 1(a) of the Order;
- entered into contracts with such persons for the provision of introduction services.[18]
- accepted payment for such introduction services.[19]
- made available to such persons information concerning persons available to be introduced who resided in Queensland.[20]
- In each case, the activities were alleged to have occurred more than seven days after 30 April 2003. The nature of the alleged conduct that the respondent engaged in, in carrying on the business of an introduction service is dealt with below.
Jurisdiction of the Court
- The jurisdiction of the Court to punish for contempt is both inherent and provided for under Ch 20 Pt 7 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”).[21]
- This case concerns an alleged contempt committed outside the Court and accordingly Ch 20 Pt 7 Div 3 of the UCPR applies. Chapter 20 Pt 2 of the UCPR (governing the enforcement of particular non-money orders) is relevant. Rule 898 provides that an order requiring a person to abstain from performing an act may, subject to r 904, be enforced, inter alia, by punishment for contempt of the person liable under the order. By r 930, the Court may punish an individual which it decides has committed contempt by making an order that may be made under the Penalties and Sentences Act 1992.
- It is well established that a charge of contempt must be proven beyond reasonable doubt.[22]
- The power to impose penalties in cases of civil contempt is to be exercised so as to ensure that court orders are complied with and to deter conduct in contravention of court orders,[23] and to maintain public confidence in the due administration of justice.[24] In Hafele Australia Pty Ltd & Anor v Maggbury Pty Ltd & Anor [2000] QCA 397 Muir J at [36] stated the purpose of the UCPR provisions is to:
“Make provision for contempt proceedings in order to provide for the enforcement of the process and orders of the Court and the punishment of acts which impede the due administration of justice.”
Notification requirements
- Rule 665 UCPR requires that an order requiring a person to perform an act must also contain a written statement on, or attached to, the order to the effect that, if the act is not performed, the person will be liable for court proceedings to compel performance and also to punishment for contempt of the court order. However, this is not a case to which r 665 applies, as it is not a case where the order required a person “to perform an act”. (This is consistent with the position prior to the introduction of the UCPR: Re Intex Consultants Ltd (1986) 2 Qd R 99 at 108). In this case, the Order restrains, or requires a person to abstain from performing an act (r 898). Accordingly, there is no requirement for the giving of any penal notification.
- Rule 904(1) specifies that a non-money order may be enforced by contempt proceedings only if the person against whom the order is to be enforced is served personally with a copy of the order. However, subrule (2) provides for an exception to personal service as follows:
“Subrule (1) does not apply to a non-money order requiring a person to perform an act within a time specified in the order or requiring a person to abstain from performing an act, if the person has notice of the order because –
(a)the person was present when the order was made; or
(b)the person was notified of the terms of the order by telephone or in another way a reasonable time before the end of the time for performance of the act or before the time when the prohibited act was to be performed as the case requires.”
- As counsel for the applicant submitted, r 904(2) is consistent with the position at common law. At common law, there is no broad rule that the accused must be proved to have been fully aware of the precise terms of the order or undertaking. In relation to a prohibitory order, it is sufficient that he or she “knows the substance of the prohibition and knowingly acts contrary to it” (see Madeira v Roggette Pty Ltd [No 2] [1992] 1 Qd R 394 (FC) at 403) or has knowledge at a level that would induce an honest, reasonable, and responsible person to check the precise terms of the order: see Madeira v Roggette Pty Ltd [1990] 2 Qd R 357 at 365-366 (affirmed in Madeira v Roggette Pty Ltd [No 2] [1992] 1 Qd R 394). See also United Telephone Company v Dale (1884) 25 Ch D 778 at 787, Foley v Herald Sun TV Pty Ltd [1981] VR 315 and Sun Newspapers Ltd v Brisbane TV Ltd (1989) 92 ALR 535 at 538.
The respondent’s knowledge of the Order
- In this case, the respondent was not personally served with the Order of Atkinson J. The applicant explained the circumstances in which that occurred. The terms of the Order were negotiated between legal representatives, including discussions between counsel representing the parties on the morning of the making of the Order. The Order was then made in the presence of, and with the consent of, the counsel and solicitors acting on behalf of the respondent.[25]
- It was contended that the making of the Order by consent and in the presence of the legal representatives of the respondent resulted in sufficient notification for the purposes of r 904(2). Citing Australian Securities Commission v Macleod (No 1) (1993) 40 FCR 155, the applicant pointed to similar circumstances being held to be sufficient for the purposes of the Federal Court Rules.[26] In that case, Drummond J held (at 161) that, where a consent order is made in the absence of a party, but in the presence of his or her legal representative, it may be inferred that the party knew the terms of the order and authorised the legal representative to furnish consent on his or her behalf to all those terms prior to the order being made. His Honour also held that notification was a neutral term and did not require notification by any particular person.
- I note, however, that the Full Federal Court in Macleod v Australian Securities Commission [1993] FCA 379 did not wholeheartedly endorse the approach of Drummond J. There, counsel for the appellant contended that, there being no evidence that the appellant was in court when the consent order in that case was made, the fact of the consent order did not warrant an inference of knowledge that an order was made in fact or that it was communicated to the appellant. It was thus argued that the only inference that could be drawn from the fact of the making of the consent order was that the appellant gave instructions to his lawyers to consent to the terms of the order. The Full Federal Court observed that, if there had been no direct evidence that the terms of the order had come to the notice of the appellant, there would have been some substance in counsel’s submission.
- In the present case, the applicant does not merely rely on the drawing of an inference of knowledge of the terms of the Order arising from the making of the consent Order. The applicant also relied on other evidence from which it was contended it may be concluded that the respondent knew of the substance of the terms of the prohibition of the Order, which was that she was “restrained permanently from carrying on the business of offering to find or finding persons to be introduced or introducing persons to others” in Queensland.
- On 19 May 2003, the Crown Solicitor forwarded to the solicitors for the respondents, by way of service, a sealed copy of the Order made by consent. It was contended that it may be inferred that the solicitors for the respondents acted, as would ordinarily be expected, in on-forwarding or communicating the terms of the Order to the respondent. But in addition, the applicant relied on an affidavit from Ms Cirkovic, the solicitor acting for the respondent at the time of the making of the Order, as further evidence of the respondent’s knowledge of the Order. Ms Cirkovic stated that, while she was unable to produce the file which related to the proceedings concerning the respondent (explaining that she believed that it had been collected by the respondent), she had no doubt that the terms of the Order were notified to the respondent on the date the Order was made. She also stated that in accordance with the firm’s usual practice, a sealed copy of the Order would have been sent by facsimile, email and/or post shortly after receipt of it.
- The applicant also pointed to a number of statements made by the respondent to third parties in which she acknowledged or admitted knowledge of the prohibition contained in the Order. In this regard, the affidavit material disclosed that:
- Mr Summerville, the respondent’s accountant, stated that on numerous occasions the respondent asked him “if there was anything [he] could do to get her around a court order that she said to [him] banned her from trading as an introduction agent in Queensland”.[27]
- The respondent told an employee, Mr Smith, that she “[had] been banned from operating as an Introduction Agent in Queensland,”[28] that she “had made a voluntary deal never to trade again as an introduction agent in Queensland”,[29] and “because of OFT’s ban on me I can’t be a Director of Love Network or Love Network Qld, but I can be a shareholder or a consultant”.[30]
- The respondent also told another employee, Ms Porth, that in respect of the introduction agency business, “I voluntarily agreed not to work in Queensland”.[31]
- She stated to another employee, Ms Veall, that there was no issue concerning Ms Veall being a director of a company as “the company was not banned. I was the one that was banned from operating in Queensland”.[32]
- The respondent also made statements to an employee, Ms Wade, to the effect, “I am not able to operate in Queensland”.[33]
- The Order provided, by paras 3 and 6, for sums of money totalling $563,611 to be paid by the first to third respondents within 120 days from the date of the Order. The applicant also pointed to the following circumstances from which it argued it may be inferred that the respondent knew of the substance of the terms of the Order:
(a) On 21 August 2003, the solicitors for the first to third respondents corresponded with the applicant’s solicitors and advised: “we have received instructions from our clients that they will be unable to pay the sums … totalling $563,611 by 28 August 2003 pursuant to the consent orders”. They further advised that “our clients have made strenuous efforts to obtain the required refinancing since the consent orders were made”.[34]
(b) Following the commencement of enforcement warrant proceedings against the respondents by the applicant in September 2003, Shand Taylor Lawyers, then acting on behalf of the first to third respondents, forwarded a letter to the Crown Solicitor referring to the enforcement proceedings and advising that “our clients have advised they now have finance in place to satisfy the judgment. A copy of a letter our clients received from their bank is enclosed for your information”.
- The terms of the letter from the National Australia Bank dated 8 October 2003 indicated that the second and third respondents provided the bank with, or informed the bank of, the details of the Order.[35] In particular, the applicant noted that the letter, addressed to “Mr Z and Mrs H Dimitrijevski” and titled “RE: Finance Application Supreme Court of Queensland – Registry Brisbane Court Order number S 2829 of 2003”, stated “we are pleased to advise that your application for finance to satisfy the monetary payments required under the above court order has been approved”.
- The applicant contended that when regard was had to the totality of the evidence, there was sufficient evidence to be satisfied to the requisite standard that the respondent knew of the substance of the prohibition contained in the Order, having been notified of the essential terms of the Order restraining her from carrying on the business of introduction services. Taking the evidence as a whole, I am satisfied beyond reasonable doubt that the respondent was notified of the terms of the Order as required by r 904(2).
Breach of the Order
- The central question on the applicant’s case is whether, notwithstanding that the prohibition in the Order is not worded to expressly prohibit the respondent from engaging as a director or shareholder or an employee of a company in carrying on the business of introduction services, the respondent (either by herself or by her servants or agents) has breached the Order through the involvement of the company Love Network Pty Ltd.
- The applicant submitted that the respondent has breached the Order and that the circumstances of this case are an example where the corporate veil of the company Love Network Qld Pty Ltd can be pierced to show the incorporation and the conduct of the business by the company comprised a sham or device used by the respondent to avoid the obligations imposed on her by the terms of the Order and to enable her to conduct the business proscribed by the Order.
- An alternative submission advanced by the application was that Love Network Pty Ltd could be characterised as the agent of the respondent. In Kirkpatrick v Kotis (2004) 62 NSWLR 567, Campbell J said at 580:
“The words ‘by himself, his servants and agents’ do not impose any obligation on any servants and agents the defendant might have. … Further, the words do not add anything to the extent of the prohibition which the order would make if those words were omitted. All they do is draw to the attention of the recipient of the order the fact that it might sometimes be possible for the defendant to carry out an act, of the type which the order prohibits, if a servant or agent carries out an act of the type prohibited.”
The alternative submission was made relying on Smith, Stone & Knight Ltd v Birmingham Corporation [1939] 4 All ER 116 (cited with some reservation in Ace Property Holdings Pty Ltd v Australian Postal Corp [2010] QCA 55 at [88] by Keane JA, with whose reasons Douglas J agreed). The alternative submission however was not pressed strongly, the applicant being content to rest on its primary argument.
Lifting the corporate veil in case of a sham or device
- The applicant’s primary submission, therefore, was that by means of the sham or device of the company, the respondent was able to hide the reality that she had engaged in the conduct that the Order prohibited. The applicant contends that the legal concepts of separate corporate personality and limited personal liability enunciated in Salomon v A. Salomon & Co Ltd [1987] AC 22 cannot be availed upon and that the exception allowing the piercing of the corporate veil applies.
- The applicant relied on the following statement of principle in Ford’s Principles of Corporations Law (at [4.250]), concerning the use of a company structure for the sole or dominant purpose of avoiding an existing legal obligation:
“It is acceptable for someone embarking on an enterprise which may attract future obligations and liability to form a limited company to carry on the enterprise. However, the position is different where persons who are already under an existing obligation form or acquire a company to engage in conduct which, if engaged in by those obligors, would be breaches of their obligation, and the avoidance of that obligation is the sole or the dominant intention of the obligors in forming or acquiring the company. If the company engages in the conduct, the Court may ascribe the company’s conduct to the obligors.”
- Reference was made to Gilford Motor Company Ltd v Horne [1933] Ch 935 and Jones v Lipman [1962] 1 WLR 832 as leading cases for lifting the corporate veil in circumstances where there is an attempt to avoid an existing transaction. The use of a sham or device was also considered in Artedomus v del Casale [2006] NSWSC 146, upon which reliance was placed. In that case, the defendant was alleged to have breached, inter alia, the express terms of a covenant and agreement associated both with the termination of his employment and with a sale of shares in a company in which he was interested and requiring him not to compete with the company for a period of three years. The Court held that the restraint was not able to be circumvented by the defendant carrying on business through the vehicle of another company as it was found to be a sham. Burchett AJ[36] stated:
“[19]The first difficulty confronted by the plaintiff, in so far as it relies upon the agreement by Mr Del Casale ‘not to compete with the Company for a period of three years’, is that the clause does not contain the words usually inserted in such clauses ‘directly or indirectly’, and the importation and sale of stone, which plainly does compete with the plaintiff, has been carried out through the company Stone Arc, not in the name of Mr Del Casale personally. However, it was part of the plaintiff’s case that Mr Del Casale’s incorporation of Stone Arc was an act done for the very purpose of competing with the plaintiff and that his subsequent attempt to dissociate himself from it under the cloak of a transfer of his interest to Mr Savini, which was not shown, certainly in the period of the establishment of its business, to have been properly documented and formalised, was a mere veil, sham or device. In J.D. Heydon on The Restraint of Trade Doctrine, 2nd edition (1999) at 243-244 it is stated:
‘But the covenantor cannot evade the covenant by carrying on a business under a title, or by forming a limited company which is a mere veil for the convenantor’s own activities, or by using a nominee for this purpose.’
[20]A number of authorities are cited in support of this proposition. In Gilford Motor Company Limited v Horne [1933] 1 Ch 935, as is made clear in the judgment of Farwell J at 937, the case against the defendant company was ‘put on the ground that the defendant company [was] merely the creature of the first defendant [an individual who had been the managing director of the plaintiff and had entered into a covenant not to entice away customers], and the first defendant is committing breaches of the covenant by the agency of the defendant company’. Lord Hanworth MR made it clear (at 956) that he accepted this view of the case, and Romer LJ expressed the same conclusion in the following terms (at 969):
‘[T]his defendant company was formed and was carrying on business [emphasis added] merely as a cloak or sham for the purpose of enabling the defendant Horne to commit the breach of the covenant that he entered into deliberately with the plaintiffs on the occasion of and as consideration for his employment as managing director.’
On that basis, an injunction was granted against both defendants. This view of the law was in accordance with a dictum of Lindley LJ in Smith v Hancock [1894] 2 Ch 377 at 385:
‘If the evidence admitted of the conclusion that what was being done was a mere cloak or sham, and that in truth the business was being carried on by the wife and Kerr for the Defendant, or by the Defendant through his wife for Kerr, I certainly should not hesitate to draw that conclusion, and to grant the Plaintiff relief accordingly.’
… The dictum of Lindley LJ was applied by Beyers J in Scheckter v Kolbe where the respondent, who had given a covenant in restraint of trade upon the sale of his business, was afterwards involved as a manager of a competing company, shares in which were owned by his brother, the respondent having lent the brother money in order to enable him to acquire the shares and given a guarantee to the company’s bankers. Beyers J said (at 114), after citing the dictum of Lindly LJ:
‘I find it difficult to resist the conclusion that the respondent is carrying on the business, through the Company, for his brother. It is submitted on the respondent’s behalf that the fact of his being a creditor of the Company does not give him an “interest” in the business. That may be so; but the cumulative effect of the evidence is that the respondent has interested himself in the business to the extent that he may be described as the deus ex machina thereof.’
…
[41]But something more needs to be said about the other provision of clause 6 by which Mr Del Casale agreed ‘not to compete with [Artedomus] for a period of three years’. As I have pointed out, this is not expressed to include competition by a company, even if owned or partly owned by Mr Del Casale. Yet, in the modern world, a company may be very much the alter ego of an individual. The principles of construction stated in J D Heydon, op cit, to which I have already referred, would suggest attention should be given to ‘the object’ of the clause, being ‘protection…against rivalry in trade’, and the agreement should be understood as embracing competition by the use of a company. In any case, I have concluded that I should accept the submission of counsel for the plaintiff that the company was used as a mere cloak for Mr Del Casale’s activities in conjunction with Mr Savini, so as to attract the application of the dictum of Lindley LJ in Smith v Hancock to which reference has been made. Subsequent events strongly confirm this. There was much evidence that Mr Del Casale, while purporting to act as a contractor contracting independently with Stone Arc, has actually been treated by it as if he were, and has behaved himself as if he were indeed, an important member of its structure. I do not accept the evidence of Messrs Del Casale and Savini to the contrary.”
- Of course, in the context of an application for contempt, the words of the order in question must be construed with due regard to the fact that penal consequences may follow. The present Order did not expressly prohibit the respondent from engaging in the business through a corporate vehicle. And the approach that may pertain in the context of construing the purpose of a restraint in a contractual document is not applicable in the situation of an allegation of breach of a restraint in an order punishable by contempt. So the first point made by Burchett AJ in para [41] concerning the principles of construction of contracted provisions is not apposite, but counsel relied not on that but on the second ground referred to by Burchett AJ in para [41] going to the use of a company as a sham.
- The applicant also relied on Kensington International Ltd v Congo [2005] EWHC 2684, where Cooke J in reviewing the authorities on piercing the corporate veil stated:
“The Third Parties rightly state that the principles set out in Salomon v A. Salomon & Co Limited [1987] AC 22 are fundamental, requiring the Court to recognise and respect the separate legal personality and a corporate entity. The authorities make it plain that the separate personality of the company cannot be ignored merely because a court considers that it might be just to do so. There are however a number of cases where the courts have thought it right to ‘pierce the corporate veil,’ although the meaning of the expression and its out-working differs in the varying contexts of the authorities concerned.
The words or phrases which appear in the authorities where ‘piercing’ has taken place and which are used in the context of justifying the court’s view, involve an element of impropriety and dishonesty. This is made plain by Hobhouse LJ in Ord v Bellhaven Pubs Ltd [1998] BCC 607 at p 615F. Transactions or business structures which are a ‘device’ or ‘stratagem,’ a ‘mask’ a ‘cloak’ or a ‘sham’ can give way to the court’s examination and determination of what lies behind them and the real situation which obtains. The classic definition of a ‘sham’ appears in Snook v London and West Riding Investments Limited [1967] 2 QB 786 (CA). There Diplock LJ said that, if the word had any meaning in law, it meant ‘acts done or documents executed by the parties to the “sham” which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intended to create’. …
The decision of the House of Lords in AG Securities Limited v Vaughan [1990] 1 AC 417 establishes that ‘sham’ does have a meaning in law, namely an attempt to disguise the true character (of the agreement) which it was hoped would deceive the court. …
In Re Polly Peck International Plc [1996] 2 AER 443 at page 444 Robert Walker J (as he then was) quoted Staughton LJ in an earlier decision, pointing out that it was better to speak of ‘substance’, ‘truth’, ‘reality’ and that which was ‘genuine’, rather than use the words ‘disguise, cloak, mask, colourable device, label, form artificial, sham, stratagem and pretence’. …”
- The applicant also referred to the New Zealand decision of Official Assignee as Assignee of the Bankrupt Estate of Armitage v Sanctuary Propvest Ltd [2009] NZHC 1783 where the Official Assignee of a bankrupt estate sought to recover property held by the respondent company on the grounds the company was a sham and alter ego for the bankrupt and it was appropriate to pierce the corporate veil. The Court considered evidence that showed the director of the company was the puppet of the bankrupt, doing as the bankrupt instructed, and the company structure was a façade to hide the involvement of the bankrupt, who was in fact controlling the company and carrying out all actions for the company in disregard for company structure. In determining whether the lifting of the corporate veil could be lifted with the result that the person who created the company was to be treated as the owner of the property, Asher J stated at [39]:
“I am satisfied that if a company structure has been set up as a façade, lacking in reality a structure involving shareholders and directors, but rather involving control by a single person in order to avoid or disguise legal duties or obligation on that person, that the Court can look behind that structure. This was the sort of sham that was put to one side in Jones v Lipman [1962] 1 WLR 832.”
- The applicant pointed to similar jurisprudence in the United States (see Ford’s Principles of Corporations Law at [4.255]) to the effect that the corporate veil may be lifted “when the notion of a legal entity is used to defeat public convenience, justify wrong, protect fraud or defend crime or where it is used to defeat an overriding public policy”.
- In Ace Property Holdings Pty Ltd v Australian Postal Corp [2010] QCA 55 at [88], Keane JA, with whose reasons Douglas J agreed, expressed the approach of the Court in respect of the principles concerning piercing the corporate veil in the following terms:
“On occasion the courts have been willing to penetrate the corporate veil when the concept of separate corporate personality is sought to be used to defeat public convenience, or to justify wrong, or to protect fraud, or to defend crime.”
- The principles concerning piercing the corporate veil were discussed in O'Connor v Stevenson (1990) 21 FCR 344. In that case, the defendant gave undertakings that, pending trial, he, his servants or agents would not engage in certain proscribed activity. Soon after, the defendant’s business was, on legal and accounting advice, operated by a shelf company which the defendant purchased and thereafter came to own and control. It was not disputed that at the time when the various alleged contempts occurred, the defendant was not trading in his own or a business name. The prosecution argued the defendant could not rely on the imposition of the company structure, but did not allege the interposition of the company was a sham, deliberately transacted to avoid the undertakings. Rather, the case put forward was that the company and its employees were the defendant’s agents. Einfeld J found that there was no evidence that the company was the defendant’s agent. His Honour also noted that the prosecution had not established that the acts and words constituting the alleged contempt in that case were those of the defendant, observing that the contempts charged were not founded on assertions that the defendant counselled, procured or was knowingly concerned in the alleged breaches of his undertakings by others, nor that he aided or abetted the company or its employees to break them. Acknowledging the exception to the principle laid down in Saloman v A. Salomon & Co Ltd, Einfeld J concluded at 354:
“In my opinion the actions under consideration in this case were clearly intentional. If done by the defendant personally, or by others at his request, they would undoubtedly have constituted a wilful disobedience of his undertakings to the court. However, the problem posed by this case is that although the defendant is alleged to be the principal offender, the case proved is that the ‘offences’ were committed by other people. There is no evidence that the defendant had anything to do with the activities in question. He was not the employer of the perpetrators at the time, but merely a director of the company which employed them. We therefore have to look elsewhere to find his first degree involvement. Even if the corporate veil is lifted, what on the evidence is underneath?”
- The applicant argued that unlike the situation in O'Connor, in this case, the evidence is clear; the actions of the respondent relied upon by the applicant (which are dealt with below) are actions that are said to be done by the respondent personally or by others at her behest, urging, request, or direction. Accordingly, it was argued that the present case is distinguishable from O'Connor.
- The applicant also sought to draw on similar judicial attitudes to those outlined already in the area of sham contractual documents in contract law. The courts have long recognised a preparedness to look behind contractual documents which parties do not intend to effect their legal relations but rather are used as a sham: see also Equuscorp Pty Ltd v Glengallen Investments Pty Ltd [2004] HCA 55; Raftland Pty Ltd v Commissioner of Taxation [2006] FCA 109. In Pickersgill and Harvey v Tsoukalas [2009] SASC 357 White J, with whom Anderson J agreed, summarised the contractual principles as follows:
“[35]The conventional contractual principle is that, absent some vitiating element such as misrepresentation, duress or mistake, or a claim for equitable or statutory relief, a person signing a document which is intended to effect legal relations is bound by its terms. A second principle is that ordinarily direct statements by contracting parties of their subjective intentions are inadmissible to contradict the language of the written contract. These were the principles upon which the defendants relied, both at trial and on appeal.
[36]The contractual principles just mentioned apply when the parties intend the signed document to effect their legal relations. They do not apply in the same way when the parties intend the document to be a sham, ie, that the document should not have any legal effect, or the apparent legal effect which it suggests on its face.
[37]The term ‘sham’ is one which can be given a variety of meanings. In this case, the plaintiff contended that the September document was not intended to have effect as a fixed price contract but was expressed as such a contract with a view to facilitating the defendants obtaining bank finance. The plaintiff’s claim, in other words, was that the September document had been drawn as a fixed price contract for the purpose of assisting the defendants in a deception of their bank but not to reflect their true agreement. This is a sham in the strict sense discussed in the authorities. In Sharrment Pty Ltd v Official Trustee and Bankruptcy Lockhart J said:
‘A “sham” is therefore, for the purposes of Australian law, something that is intended to be mistaken for something else or that is not really what it purports to be. It is a spurious imitation, a counterfeit, a disguise or a false front. It is not genuine or true, but something made in imitation of something else or made to appear to be something which it is not. It is something which is false or deceptive.’
[38]In Scott v Federal Commissioner for Taxation (No 2) Windeyer J expressed the concept in similar terms:
‘On the other hand, if the scheme, including the deed, was intended to be a mere façade behind which activities might be carried on which were not to be really directed to the stated purposes but to other ends, the words of the deed should be disregarded … A disguise is a real thing: it may be an elaborate and carefully prepared thing; but it is nevertheless a disguise. The difficult and debatable philosophic questions of the meaning and relationship of reality, substance and form are for the purposes of our law generally resolved by asking did the parties who entered into the ostensible transaction mean it to be in truth their transaction, or did they mean it to be, and in fact use it as, merely a disguise, a façade, a sham, a false front – all these words have been metaphorically used – concealing their real transaction. …’
In Raftland, Kirby J reviewed some of the Australian authorities and concluded that an essential element in the legal notion of sham was an intention by the parties not to give effect to the legal arrangements set out in their apparent agreement, understood only according to its terms.
[39]The determination of whether a document is a sham in the sense discussed above involves an examination of the parties’ subjective intentions.”
- In a similar vein, in Campbelltown City Council v Toth [2005] NSWLEC 89, the respondent was found to be in contempt of an order restraining him by himself, his servants and agents from using suffering or permitting certain premises from being used as a sex shop. The respondent sought to contend that the premises had been sold and subleased. The Court found the charge of contempt was proved, being satisfied that the transaction was contrived to attempt to overcome the effect of the order and that the respondent continued to operate the business.
Actions of respondent relied upon
- The applicant contended that the company Love Network Qld Pty Ltd was a façade created to hide the conduct engaged in by the respondent. That is, the company structure was set up as a sham or device (lacking, in reality, a structure involving independent directors and in fact controlled by the respondent) in order to avoid or disguise the legal duty or obligation imposed by order of the court on the respondent not to engage in the business of introductory services. It was argued that the affidavit material revealed that it was never in fact intended that the directors would engage in any substantive way in the control of the company. They were merely the respondent’s puppets; the respondent controlled the company and the directors and employees did what she told them to do.
- The applicant submitted that the evidence showed that, notwithstanding the Order made, the respondent wished to continue to engage in carrying on the business of providing introduction services in Queensland and did so by interposing the device of the company Love Network Qld Pty Ltd which, for all practical purposes, was her creature and in that respect a sham.
- The actions of the respondent relied upon by the applicant as revealing her to have used the corporate structure of Love Network Qld Pty Ltd to hide her own engagement in the business activity proscribed by the Order, comprised the following matters which are established by the affidavit material before the Court:
- making the premises available for the business;[37]
- arranging for the Introduction Agents Licence to be obtained for the business;[38]
- procuring persons to accept appointment as officers of Love Network Qld Pty Ltd on the basis that they acted as the respondent directed;[39]
- arranging for a database of potential customers to be provided for the use of the business;[40]
- engaging in the hiring and firing of employees for the business;[41]
- arranging for payment of remuneration to employees and agents of the business;[42]
- directing employees as to when leave could be taken;[43]
- directing and supervising the employees and agents of the business in providing the introduction services;[44]
- participating herself in the provision of introduction services to customers or potential customers of the business;[45]
- controlling the income and expenditure of the business;[46]
- having scant regard to concepts of corporate personality;[47]
- treating the assets of the company as her own.[48]
- The respondent, it was submitted, acted in this manner, neither as an officer or employee of Love Network Qld Pty Ltd, but by manipulating and using the company as her alter ego. Love Network Qld Pty Ltd was utilised solely as a guise to permit the business to be carried on by the respondent. The “directors” were her “cat’s paws” put in place by her to front a company used to mask her direct involvement in the business.
- The applicant submitted that the evidence demonstrated that the respondent was aware that she was bound by the Order, and was not able to obtain an Introduction Agents Licence under the Introduction Agents Act 2001 (Qld) by herself, her servants or agents. Her lack of bona fides in respect of her conduct was said to be particularly evidenced by the following matters established by the affidavit materials:
- the respondent’s statements to her accountant and employees to which reference has been made;
- the statement to the employee, Ms Allison, to the effect, “I am concerned that Adam will go to the Office of Fair Trading and tell them about my involvement in Love Network” and “OFT cannot get me because I do not have my name on any paperwork and I can’t be linked to Love Network”;[49]
- instructing employees of the business to lie to third parties and employees of Love Network Qld Pty Ltd and advise that she had no involvement at all with the business;[50] and
- using false names including “Helena”[51], “Vivian”[52], “Kimberley”[53], “Victoria”[54], and “Angeline”[55] when engaging in activities as part of the business.
- It was submitted that the evidence showed the business to have generated considerable fees for engaging in the business of providing introduction services. In particular, in respect of the persons referred to in the particulars of the contempt, the returns were, as outlined in the affidavit material:
- Mr Humphries: $25,527.5 for membership;[56]
- Mr Neal: $168,759.16 for membership;[57]
- Mr Besch: $56,322.01 for membership and unauthorised costs;[58]
- Mr Pearce: $699 for membership;[59] and
- Mr McKay: $495 for membership.[60]
- A review of the affidavit material bears out the applicant’s contentions. Although ostensibly the respondent did not have a direct role at Love Network Qld Pty Ltd, former employees of the company depose to her being directly involved in the affairs of the business. The evidence of the employees of the company included the following. Mr Collins, who was employed as a salesperson, deposed to the respondent being the “person in charge” and giving “directions to all the staff as to what to do and how to do it”. Indeed, his evidence was that she told him that she was “the boss”.[61] It was the respondent who put his employment package together and went through his employment contract with him.[62] He stated in his affidavit that the respondent spoke directly to clients, involving herself with such issues as what discounts could be given and, in relation to one of his clients, intervening to instruct him on what to say while he was speaking to the client on the phone.[63]
- Ms Allison deposed to the respondent being the person who authorised refunds for clients and that the respondent was to her knowledge the only one with the password that was needed to authorise a refund. Staff were sent to the respondent to sort out issues such as design and paperwork finalisation, staff issues, the taking of payments, matters concerning overpayments and how to allocate them.[64] Ms Allison stated that she was aware that the respondent’s apartment was often used to accommodate clients and she was engaged in making those arrangements.[65] She was instructed never to say that “Helen had anything to do with Love Network”, and to say that “there is a board of directors” instead.[66] The respondent would speak and deal with the staff individually and dealt with Ms Allison in relation to the amount of notice she was required to give.[67]
- Ms Hammadi stated that while she was working on manuals for Love Network Qld Pty Ltd as a consultant, she answered directly to the respondent, and to her knowledge, the respondent was responsible for paying the bills of the company.[68] She also stated that her wages for her work at the company were paid in cash by the respondent.[69] Ms Porth, who was employed as an introduction consultant, similarly identified that while working at the company she reported directly to the respondent. Additionally, when she needed approval for advertising or expenditure for the company she sought that approval from the respondent. She also stated that for a period while she was working at the company, she was being paid by TLC Consulting Services Pty Ltd.[70]
- Ms Jude deposed to the fact that although she was put in place as a director of the company, the respondent told her that she would “do everything, including make the decisions and fund it all”.[71] Ms Wade, who took over as director from Ms Jude deposed in her affidavit that she answered to the respondent, who made decisions regarding the funding and expenditure of the company, gave approvals for staff wages and directed her to sign the lease for Suite 2808 on behalf of the company.[72]
- From the evidence of the former employees, it is clear that the respondent was more than just a passive investor or shareholder. She played an integral and direct part of the day to day running of the business.
Conclusion
- As already mentioned, the respondent was not precluded by the Order from indirect involvement in the business of providing “introduction services” through the use of a corporate body. However, it is one thing for the respondent to have been a shareholder of a company that in turn owned a company that conducted an introduction services business. The Order did not prohibit such indirect engagement. But it was an entirely different matter to circumvent the prohibition contained in the Order by interposing a corporate structure to disguise and conceal the reality revealed by the affidavit material that the respondent was in fact directly engaged in the operation of the business and was its controlling mind. The respondent interposed a corporate structure, but then proceeded to bypass that structure in involving herself directly in the day to day running of the business. The corporate vehicle was merely a device adopted to conceal that reality. I am satisfied to the requisite standard on the material before the court that the sole purpose of the company Love Network Qld Pty Ltd was to conceal the respondent’s engagement in the conduct which was proscribed by the Order and to evade the legal obligations stemming from the Order. I conclude that the incorporation and the conduct of the business by the company Love Network Qld Pty Ltd was a sham or device used by the respondent to avoid the obligations of the Order. I find that the respondent is guilty of contempt in that she has carried on the business of “introduction services”, such business including “providing introduction services in Queensland”, in breach of the Order made by Atkinson J on 30 April 2003. I find the alleged contempt as particularised proved.
- Given that conclusion, it is not necessary to deal with the alternate submission raised by the applicant relying on Smith, Stone and Knight Ltd v The City of Birmingham [1939] 4 All ER 116, that the respondent breached the Order acting through her agents.
- I will hear further submissions as to punishment.
Footnotes
[1] Exhibit JLP-1 p1 Affidavit Prior (18/12/2009).
[2] Exhibit JLP-1 p3 Ibid.
[3] Exhibit JLP-2 pp7, 8 Ibid.
[4] Para 6 and Exhibit TRM-1 Affidavit Millmore; paras 13-16, 20 and Exhibit MKJ-1 Affidavit Jude.
[5] Paras 10-24 and Exhibit JMW-1 Affidavit Jason Wade (29/03/2011).
[6] Exhibit JLP-4 Affidavit Prior (18/12/2009); para 20 Affidavit Doran; para 22 Affidavit Smith (18/12/2009).
[7] Para 6 Affidavit Collins.
[8] Paras 7-17 Affidavit Patel; paras 16, 20 Affidavit Hammadi.
[9] Paras 2, 37-40, 43, 51-58, 108, 142-143 Affidavit Besch.
[10] Paras 2, 17-21, 24-26, 31, 32 Affidavit Pearce.
[11] Paras 3, 8, 9 15, 24, 27 Affidavit Humphries.
[12] Paras 5, 17, 19, 22, 36, 47-51, 86-91, 111-115 Affidavit Neal.
[13] Paras 1, 14-18, 20, 21 Affidavit McKay.
[14] Paras 37-40, 51-58 Affidavit Besch.
[15] Paras 14-18, 20, 21 Affidavit McKay.
[16] Paras 17-21, 24-26, 31, 32 Affidavit Pearce.
[17] Paras 47-51, 86-91, 111-114 Affidavit Neal.
[18] Paras 11, 27, 72 and Exhibits IBD-1, IBD-10, IBD-20 Affidavit Besch; para 11 Affidavit Pearce; paras 10, 21, 25 Affidavit Humphries; paras 17, 36 and Exhibit AJN-4, AJN-16 Affidavit Neal; paras 5-10 and Exhibit DGM-5 Affidavit McKay; paras 19-21 and Exhibits KLS-3, KLS-5, KLS-6, KLS-8, KLS-9, KLS-18, KLS-20 Affidavit Smith (29/03/2010).
[19] Paras 12, 28, 72, 79, 112, 124-6, 133 and Exhibits IBD-2, IBD-4, IBD-5, IBD-6, IBD-11, IBD-12, IBD-20, IBD-23 to 25, IBD-30 Affidavit Besch; para 12 and Exhibit RRP-6 Affidavit Pearce; paras 6, 21, 30-35 and Exhibits JNH-1 to 3 Affidavit Humphries; paras 16-17, 32-33, 35, 38, 52, 64-65, 68, 70, 72-74, 77-78, 94-96, 98, 101, 104, 107, 120 and Exhibits AJN-4, AJN-5, AJN-14, AJN-15, AJN-17, AJN-22, AJN-23, AJN-27 Affidavit Neal; paras 5-11 and Exhibits DMG-8, DMG-9 Affidavit McKay.
[20] Paras 37-40, 51-58 Affidavit Besch; paras 17-21, 24-26, 31-33 Affidavit Pearce; paras 47-51, 86-91, 111-114 Affidavit Neal; paras 14-18, 20-21 Affidavit McKay.
[21] Bakir v Doueihi [2001] QSC 414 at [5-9].
[22] Bakir v Doueihi [2002] QSC 19; Witham v Holloway [1995] HCA 3; Consolidated Press Ltd v McRae [1955] HCA 11.
[23] Australian Competition and Consumer Commission v Dynacast (Int) Pty Ltd [2007] FCA 429 at [87].
[24] R v Fletcher; ex parte Kisch [1935] HCA 1.
[25] Affidavit Prior (23/02/2011) and Affidavit Prior (15/03/2011).
[26] Similarly, the applicant relied on Re Intex Consultants Pty Ltd [1986] 2 Qd R 99 per Thomas J at 106-108; Douglas v Douglas [1978] Qd R 75 per Dunn J at 77-78 in contending that it has been held that in the case of an order embodying an undertaking, it will be presumed that the person giving the undertaking is aware of its terms.
[27] Affidavit Summerville (29/03/2010).
[28] Para 2 Affidavit Kelsie Lawson Smith (18/02/2011).
[29] Para 3 ibid.
[30] Para 5 ibid.
[31] Affidavit Porth (18/02/2011).
[32] Affidavit Veall (18/02/2011).
[33] Affidavit K Wade (22/02/2011).
[34] Exhibit JLP-8 Affidavit Prior (23/02/2011).
[35] Exhibit JLP-13 Affidavit Prior (23/02/2011).
[36] The decision was overturned on appeal on other grounds but without criticism of these comments.
[37] Paras 34-36 Affidavit K Wade (29/03/2010); paras 17-21 Hammadi; paras 10-11 Affidavit J Wade (29/03/2010); paras 21-23 Affidavit Smith (18/12/2009).
[38] Para 6 and Exhibit TRM-1 Affidavit Millore; paras 13-16, 20 and Exhibit MKJ-1 Affidavit Jude.
[39] Paras 13-25 Affidavit Jude; paras 21-24, 41 Affidavit K Wade (29/03/2010); paras 41-45 Affidavit Smith (18/12/2009); para 2 and Exhibit JLP-1 Affidavit Prior 18 December 2009.
[40] Paras 7-17 Affidavit Patel; paras 16, 20 Affidavit Hammadi; paras 16, 17 Affidavit Smith (18/12/2009).
[41] Paras 14-17 Affidavit Collins; para 39(a) Affidavit Allison; paras 8-16, 22 Affidavit Hammadi; paras 6-18 Affidavit Rivamar; paras 44, 54(d) Affidavit Veall (30/03/2011); paras 63-65 Affidavit Smith (18/12/2009).
[42] Para 13, Affidavit Hammadi; para 15 Affidavit Rivamar; paras 18-19 Affidavit Patel; Paras 2(a),(b), 4-6, 8-11 Affidavit Impey; paras 36(e),(f), 48, 53, Exhibit KLW-6 Affidavit Wade (29/03/2010); paras 50-52, 54(a) and Exhibit HVV-6 Affidavit Veall (30/03/2010); paras 10-11 Affidavit Newman; paras 66-67 Affidavit Smith (18/12/2009).
[43] Para 19 Affidavit Patel; para 54(e) Affidavit Veall (30/03/2010).
[44] Para 24 Affidavit Touhy; paras 13, 21-29 Affidavit Collins; paras 20, 21, 27, 28, 38(c)-(e), 65, 66, 76 Affidavit Allison; para 15 Affidavit Hammandi; paras 22-37, 41 and Exhibit SMP-2 Affidavit Porth; para 35 Affidavit Wade (29/03/2010); paras 2-19 Affidavit Patel; paras 14-26 Affidavit Davidson; paras 6-14, 19, 20 Affidavit Newman; paras 17, 19, 22-29, 33, 40, 41, 43, 50, 51, 54 Affidavit Rivamar; paras 45-46, 54, 55, 59, 64, 65, 67-78, 94-95, 97, 104, 107 and Exhibit HVV-3 Affidavit Veall (30/03/2010); paras 35, 37, 48 Affidavit Smith (18/12/2009).
[45] Paras 8-11, 69 Affidavit Smith (18/12/2009); paras 19-20, 24, 26, 28, 35-51 Affidavit Rivamar; paras 47-52 Affidavit Neal; paras 51-59 Affidavit Besch; paras 34-38 Affidavit Preusker; paras 61, 83-89, 90-97, 106-109 Affidavit Veall (30/03/2010); paras 21-29 Affidavit Collins; para 12 Affidavit Newman; paras 20-21 Affidavit Davidson.
[46] Paras 30-41 and Exhibit LFD-1 Affidavit Doran; paras 28-30 and Exhibit SMP-1 Affidavit Porth; paras 4-11 and Exhibit TCI-3 Affidavit Impey; paras 38-39, 48-53 Affidavit Smith (18/12/2009); para 5 and Exhibit KLS-1 Affidavit Smith (29/03/2010)(2); paras 40-42 Affidavit K Wade (29/03/2010); paras 17, 21, 23 and Exhibits JMW-2, JMW-3 Affidavit J Wade; para 34 Affidavit Rivamar; paras 5-6 and Exhibit KEH-3 Affidavit Haidar; paras 8, 10 and Exhibit RNP-10, RNP-16 Affidavit Palmer-Brown.
[47] Paras 6-19 Affidavit Patel; paras 4-11, 13-16 Affidavit Summerville; paras 21-30, 38, 39, 40, 44, 48, 68 Affidavit Smith (18/12/2009).
[48] Exhibits RNP-1, RNP-5, RNP-16 Affidavit Palmer-Brown; paras 34-40 Affidavit Doran; Exhibit KEH-2, KEH-3 Affidavit Haidar; paras 13, 15, 22 Affidavit Hammadi; paras 7-15 Affidavit Hastie.
[49] Para 37 Affidavit Allison.
[50] Paras 29-30, 68 Affidavit Smith; para 21 Affidavit Newman.
[51] Para 62 Affidavit Veall; para 22 Affidavit Davidson; para 20 Affidavit Rivamar.
[52] Para 63 Affidavit Veall.
[53] Paras 13, 21 Affidavit Newman; para 90(a) Affidavit Allison; para 62, Exhibit HVV-7 Affidavit Veall.
[54] Para 19 Affidavit Smith (18/12/2009).
[55] Para 87 Affidavit Hollie Veall (30/03/2010) and para 48 Affidavit Neal.
[56] Paras 6, 21, 30-35 and Exhibit JNH-1 to 3 Affidavit Humphries.
[57] Paras 16-17, 32-33, 35, 38, 52, 64-65, 68, 70, 72-74, 77-78, 94-96, 98, 101, 104, 107, 120 and Exhibits AJN-4, AJN-5, AJN-14, AJN-15, AJN-17, AJN-22, AJN-23, AJN-27 Affidavit Neal.
[58] Paras 12, 28, 72, 79, 112, 124-6, 133 and Exhibits IBD-2, IBD-4, IBD-5, IBD-6, IBD-11, IBD-12, IBD-20, IBD-23 to 25, IBD-30 Affidavit Besch.
[59] Para 12 and Exhibit RRP-6 Affidavit Pearce.
[60] Paras 5-11 and Exhibit DMG-8, DMG-9 Affidavit McKay.
[61] Para 13 Affidavit Collins.
[62] Para 16 Affidavit Collins.
[63] Paras 20-29 Affidavit Collins.
[64] Paras 19-21 Affidavit Allison.
[65] Para 24 Affidavit Allison.
[66] Para 32 Affidavit Allison.
[67] Para 79 Affidavit Allison.
[68] Paras 14-15 Affidavit Hammadi.
[69] Para 13 Affidavit Hammadi.
[70] Paras 26-27 Affidavit Porth (29/05/10).
[71] Para 13 Affidavit Jude.
[72] Para 36 Affidavit K Wade (29/03/2010).