Court of Appeal Supreme Court New South Wales

• Medium Neutral Citation: Baker v Paul [2013] NSWCA 426
• Hearing dates: 10 September 2013
• Decision date: 11 December 2013
• Before: Meagher JA at [1]; Barrett JA at [43]; Gleeson JA at [44]

Decision

Appeal dismissed with costs.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

• Catchwords: CONTEMPT OF COURT - first respondent restrained by freezing order from using his assets other than for permitted purposes - first respondent's assets defined to include assets of third respondent - separate order made restraining third respondent from disposing of its assets - first respondent applied moneys of third respondent for permitted purposes - whether orders unclear or ambiguous - whether first respondent knowingly interfered with administration of justice by assisting in breach of orders by third respondent
• Legislation Cited: Corporations Act 2001 (Cth), ss 601AD, 601AH; Evidence Act 1995, s 119; Supreme Court Act 1970, s 101; Supreme Court Rules 1970, Pt 55 Div 3 Rule 7
• Cases Cited: Attorney General v Times Newspapers Ltd [1992] 1 AC 191; Australian Consolidated Press Ltd v Morgan [1965] HCA 21; 112 CLR 483; Cardile v LED Buildings Pty Ltd [1999] HCA 18; 198 CLR 380; CCOM Pty Ltd v Jiejing Pty Ltd (1992) 36 FCR 524; CTM v The Queen [2008] HCA 25; 236 CLR 440; Gerlach v Clifton Bricks Pty Ltd [2002] HCA 22; 209 CLR 478; ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248; Kirkpatrick v Kotis [2004] NSWSC 1265; 62 NSWLR 567; Matthews v Australian Securities and Investments Commission [2009] NSWCA 155; Metcash Trading Ltd v Bunn (No 5) [2009] FCA 16; Pang v Bydand Holdings Pty Ltd [2011] NSWCA 69; Redwing Ltd v Redwing Forest Products Ltd (1947) 177 LT 387; Seaward v Paterson [1897] 1 Ch 545; Sigalla v TZ Limited [2011] NSWCA 334; Spokes v Banbury Board of Health (1865) LR 1 Eq 42; Wellesley (Lord) v Mornington (Earl) (1848) 11 Beav 180; 50 ER 785; Witham v Holloway [1995] HCA 3; 183 CLR 525; Z Ltd v A-Z and AA-LL [1982] QB 558; Zhu v Treasurer of NSW [2004] HCA 56; 218 CLR 530
• Category: Principal judgment
• Parties: Kenneth James Baker (First Appellant); KJB Media Pty Ltd (Second Appellant); Anthony Christopher Paul (First Respondent); ACN 129 258 546 Pty Ltd (Second Respondent); Tony Paul Media Ltd (Third Respondent)
• Representation: Counsel: M Sneddon, K Tang (Appellants); E Peden (First Respondent); No appearance (Second and Third Respondents); Solicitors: McLaughlin & Riordan (Appellants); McLean & Associates (Respondents)
• File Number(s): 2012/334072

Decision under appeal

• Jurisdiction: 9111
• Citation: Baker v Paul (No 2) (Supreme Court of New South Wales, Gzell J, 21 September 2012, unreported); Baker v Paul (No 3) [2012] NSWSC 1174
• Before: Gzell J
• File Number(s): 2010/285602

Judgment

1 MEAGHER JA: The appellants brought proceedings by motion charging the first respondent (Mr Paul) and Tony Paul Media Ltd (named as third respondent in the appeal) with contempt. That charge was brought in respect of orders made by Rein J on 16 September 2010. Those orders included that the third respondent "by itself, its employees, servants and agents" be restrained from withdrawing or otherwise dealing with moneys standing in an account with St George Bank Ltd "so as to reduce the balance of the account below the sum of $37,837.74". The statement of charge alleged that the third respondent was guilty of contempt by breaching that order and that Mr Paul was guilty of contempt by causing the third respondent to breach that order.

2 The primary judge dismissed the charges of contempt against Mr Paul and the third respondent: Baker v Paul (No 3) [2012] NSWSC 1174.

3 In the course of hearing the motion his Honour was required to rule on a claim for privilege made by the first and third respondents in respect of over 4,000 documents produced in answer to a subpoena addressed to a Mr Sanderson, an accountant retained on behalf of those respondents in the underlying proceedings. The appellants sought the production of those documents for use in the cross-examination of Mr Paul. He and the third respondent claimed privilege, relying on s 119 of the Evidence Act 1995, on the basis that the documents were confidential communications made for the dominant purpose of obtaining legal advice or otherwise confidential and prepared for that purpose. The primary judge upheld that claim: Baker v Paul (No 2) (Supreme Court of New South Wales, Gzell J, 21 September 2012, unreported).

4 The appellants appeal from each of those decisions. Although the latter decision was interlocutory, the appellants do not seek leave to appeal from it under s 101(2)(e) of the Supreme Court Act 1970. Instead they rely upon their right to appeal the dismissal of their motion charging contempt as entitling them also to challenge the ruling in relation to privilege on the basis that it was an interlocutory order "which affected the final result"; in support of that proposition they rely upon the statement of Gaudron, McHugh and Hayne JJ in Gerlach v Clifton Bricks Pty Ltd [2002] HCA 22; 209 CLR 478 at [6].

The appeal does not proceed against the third respondent

5 Although Tony Paul Media Pty Ltd was named as third respondent in the notice of appeal filed on 20 October 2012, it was deregistered on 13 October 2012. In consequence, by s 601AD(1) of the Corporations Act 2001 (Cth), it ceased to exist on that day and accordingly did not exist when the appeal proceeding was commenced. The appellants sought to overcome that difficulty by applying for an order under s 601AH(2) that ASIC reinstate that registration. On the appellants' ex parte application, Brereton J made that order on 9 September 2013, the day before the hearing of this appeal. That order did not, however, reinstate the company's registration, which requires an administrative act on the part of ASIC. As there was no evidence of that having occurred at the commencement of the hearing of the appeal, the appellants accepted that the appeal could only proceed against the first respondent.

The relevant evidence

6 It is convenient to summarise the relevant evidence before considering the reasoning of the primary judge and the issues raised by the appeal. The latter are principally directed to the primary judge's finding that Mr Paul did not know or believe that the payment of moneys from the third respondent's account with St George Bank would involve any breach of the orders made on 16 September 2010. That was because, as he understood those orders, they also continued an existing order against him which permitted the payment of living, legal and business expenses using his assets, which, as defined by those orders, included the assets of the third respondent's business.

7 Before December 2009 the first appellant and first respondent carried on a business of selling media advertising via a corporate vehicle, the second respondent, formerly named Associated Media Pty Ltd (Associated Media). In December 2010 the appellants commenced proceedings against Mr Paul and the second respondent claiming that moneys received in the course of the unwinding of that business had been applied otherwise than in accordance with the terms of an agreement made on 19 December 2009.

8 On 24 August 2010 solicitors acting for the appellants sought undertakings from Mr Paul that he not withdraw or deal with moneys held in three bank accounts of Associated Media with St George Bank. Following receipt of that letter, and acting at least partly on the advice of St George Bank, Mr Paul arranged on 25 August for the moneys in those three accounts to be consolidated into one account of Associated Media. On 27 August, on the appellants' application, Nicholas J made orders restraining Mr Paul and Associated Media from withdrawing money from the three accounts. Those orders were made ex parte and continued until 5.00pm on 30 August 2010. On 28 August Mr Paul received notice of them. He gave evidence that he informed the solicitor then acting for him that the three accounts had been closed and the funds transferred to a new account. That evidence was not challenged. On Sunday 29 August Mr Paul's mother died. Understandably, he maintained that at this time he was "focusing on family". On 30 August the order made on 27 August was extended by consent "until further order".

9 The appellants became aware on 31 August that the three accounts had been closed. On 1 September they obtained an ex parte freezing order against Mr Paul and Associated Media. That order, made by Slattery J on the evening of that day, included the following specific orders and terms:

"3 Subject to the next paragraph, this order has effect up to and including 5:00pm on Monday, 13 September 2010 ... On the return day at 10:00am there will be a further hearing in respect of this order before the Court.

...

5 In this order:

...

'you', where there is more than one of you, includes all of you and includes you if you are a corporation;

...

if you are ordered to do or not to do something you must do it or not do it yourself or through directors, officers, partners, employees, agents or others acting on your behalf or on your instructions or with your encouragement or in any other way.

...

FREEZING OF ASSETS

7 (a) You must not remove from Australia or in any way dispose of, deal with or diminish the value of any of your assets in Australia ('Australian assets') up to the unencumbered value of AUD$72,820.80....

8 For the purposes of this order,

(1) your assets include:

(a) all your assets, whether or not they are in your name and whether they are solely or co-owned;

...

(c) the following assets in particular: the property known as 9 Meehan Road, Cromer New South Wales or, if it has been sold, the net proceeds of the sale; the assets of your business Tony Paul Media Pty Limited t/as Association Media or, if any or all of the assets have been sold, the net proceeds of the sale; and any money in any and all bank accounts.

...

EXCEPTIONS TO THIS ORDER

11 This order does not prohibit you from:

(a) paying your ordinary living expenses;

(b) paying your reasonable legal expenses;

(c) dealing with or disposing of any of your assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred; and

(d) in relation to matters not falling within (a), (b) or (c), dealing with or disposing of any of your assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so you give the applicant, if possible, at least two working days written notice of the particulars of the obligation."

10 Because of the provisions of paragraphs 5, 8 and 11, the effect of these orders was not to prohibit Mr Paul from using his assets, which by the definition in order 8(c) included the assets of the business of the third respondent, to pay ordinary living expenses, reasonable legal expenses or from dealing with or disposing of those assets in the ordinary and proper course of his business.

11 Mr Paul received a copy of these orders on the evening of 1 September 2010. They were extended, apparently by consent, on 13 September 2010.

12 On 16 September 2010 the following orders were made by Rein J by consent:

"1. Orders that Tony Paul Media Pty Ltd ... be joined as third defendant to these proceedings.

2. Orders that the operation of the orders of Slattery J. of 1 September 2010, extended by Rein J. on 13 September 2010, be extended until further order of the Court.

3. Orders that the third defendant, by itself, its employees, servants and agents be restrained until further order of the Court, from withdrawing or otherwise dealing with the monies held standing in St. George Bank Ltd's account number XXX so as to reduce the balance of the account below the sum of $37,837.74."

13 Mr Paul was not present in Court when these orders were made, nor was he provided with a copy of them at that time. His evidence before the primary judge was that, at some stage after 1 September 2010, he understood that orders were to be made that extended the previous orders and permitted him to continue to use the money in the third respondent's account to pay the expenses of the company, himself and his basic living allowances (Black 46). That understanding was based on conversations with his solicitors. He did not receive a copy of the orders made on 16 September 2010 until 19 October 2011.

14 Mr Paul also gave evidence, which was not challenged, that between 22 September 2010 and 4 April 2011 he withdrew moneys from the St George bank account and paid living expenses, legal expenses and company bills and expenses. He said that he did so on the understanding that those payments were within the terms of the exception to the freezing order made on 1 September 2010 which, he understood, had been extended.

15 On 9 March 2011 Mr Paul's former solicitors received and forwarded to Mr Paul a letter from the appellants' solicitors which, when referring to the orders, noted:

"The Court proceeded to make freezing Orders against the First and Second Defendants on 1 September 2010. It was then necessary for the Plaintiffs to apply for further Orders from the Court by Consent on 16 September 2010 when the Third Defendant was joined into the proceedings and the operation of the freezing Orders was extended to the third defendant". (emphasis added)

The letter continued:

"... we note that it appears from bank statements obtained from St George Bank under subpoena, that despite the existence of the Order, since the date of the Order, the Third Defendant has caused the balance of the aforesaid account to fall below the amount provided by the Order. We advise that our clients reserve their rights arising from this matter."

16 The appellants rely upon this letter as fixing Mr Paul with knowledge of the terms of the orders made on 16 September 2010. The making of payments from the St George bank account of the third respondent continued for a further month until 4 April 2011.

The decision of the primary judge

17 The appellants' notice of motion sought orders that Mr Paul, as sole director of the third respondent, be found guilty of contempt for failing to comply with the order which restrained the third respondent and that the third respondent be found guilty of contempt for failing to comply with the order which restrained it. The first order as sought did not recognise the distinction between the contempt constituted by non-compliance with an order directed to the party charged and the contempt constituted by a third party who, knowing of an order, assists in its breach and thereby interferes with the administration of justice. That distinction is discussed by Young JA (Macfarlan JA and Handley AJA agreeing) in Sigalla v TZ Limited [2011] NSWCA 334 at [13]-[17].

18 Notwithstanding that the first of the orders sought does not recognise that distinction, the primary judge considered that the statements of charge provided pursuant to Supreme Court Rules, Pt 55, Div 3, Rule 7 did so. The essence of the charge against the first respondent was that he was guilty of contempt "by causing the third [respondent] to breach" the order made by Rein J on 16 September 2011 and, as against the third respondent, that it was guilty of contempt "by breaching" that order. Mr Paul does not challenge, by notice of contention, the primary judge's conclusion that the statement of charge against him was sufficient to indicate that he was charged with knowingly assisting in a breach of the orders by the third respondent.

19 Addressing the position of Mr Paul, the primary judge correctly observed, at [20], that a person who is not personally bound by a court order may be liable for interfering with or obstructing the course of justice if he or she does so knowingly. The authorities supporting this proposition include Wellesley (Lord) v Mornington (Earl) (1848) 11 Beav 180 at 181; 50 ER 785 at 786; Seaward v Patterson [1897] 1 Ch 545 at 555-556; Z Ltd v A-Z and AA-LL [1982] QB 558 at 578-579, 581; Attorney General v Times Newspapers Ltd [1992] 1 AC 191 at 206; CCOM Pty Ltd v Jiejing Pty Ltd (1992) 36 FCR 524 at 530-531; Cardile v LED Buildings Pty Ltd [1999] HCA 18; 198 CLR 380 at [30]; Zhu v Treasurer of NSW [2004] HCA 56; 218 CLR 530 at [121]; Sigalla at [14]-[17]. The primary judge also correctly observed, at [18], that knowing obstruction or interference with the course of justice must be proved beyond reasonable doubt: Witham v Holloway [1995] HCA 3; 183 CLR 525 at 534.

20 In addressing whether Mr Paul interfered with the course of justice by knowingly assisting a breach of the order by the third respondent, it was necessary to consider the meaning of the order and whether what happened was a breach of it which was or could have constituted a contempt by that respondent. The primary judge did not squarely address this question. He appears to have proceeded on the basis that an element of the charge against the company included that it knew that what was being done was inconsistent with the terms of the orders: [20], [27]. That is not the position in relation to a party charged with contempt for breaching an order or undertaking. To establish a contempt by that party, whilst it is necessary to prove knowledge of the terms of the order, it is not necessary to prove that the alleged contemnor intended to disobey the order. The applicable legal principles were stated by Finn J in Metcash Trading Ltd v Bunn (No 5) [2009] FCA 16 at [9] in a passage cited with approval by Tobias JA (Campbell JA agreeing) in Matthews v Australian Securities and Investments Commission [2009] NSWCA 155 at [16], [194].

21 An order whose meaning is unclear and ambiguous may not be enforced by proceedings for contempt against the person alleged to have breached it: Australian Consolidated Press Ltd v Morgan [1965] HCA 21; 112 CLR 483 at 492, 503, 515-516. For the same reason, such an order may not be the subject of a charge of interfering with the course of justice because one cannot knowingly assist the breach of an order whose meaning is unclear or open to real doubt.

22 Whether a particular order or undertaking is sufficiently clear and unambiguous is itself a question about which minds may differ. In Australian Consolidated Press v Morgan, Owen J, with whom Windeyer J agreed, cited with approval (at 515) the statement of Jenkins J in Redwing Ltd v Redwing Forest Products Ltd (1947) 177 LT 387 that "a defendant cannot be committed for contempt on the ground that upon one of two possible constructions of an undertaking being given he has broken his undertaking. For the purpose of relief of this character, I think the undertaking must be clear and the breach must be clear beyond all question". Jenkins J described the questions of construction in that case as not being "entirely easy". Windeyer J (at 503) drew a distinction between an order or undertaking whose true meaning "although not immediately plain, can be ascertained according to ordinary rules of construction" and one which gives rise to uncertainties which cannot be resolved in that way.

23 Barwick CJ formulated a perhaps more onerous test as to when an order will not be sufficiently clear. He considered (at 492) that if an order or undertaking "bears a meaning which the Court is satisfied is one which ought fairly to have been in the contemplation of the person to whom the order was directed or who gave the undertaking as a possible meaning, the fact that that meaning results from a process of construction and involves a choice of possible meanings does not, in my opinion, preclude the Court from enforcing the order or undertaking in the sense which the Court assigns to it".

24 An early statement of the relevant principle is that of Sir W. Page Wood, VC in Spokes v Banbury Board of Health (1865) LR 1 Eq 42 at 48-49 where he observed that the order of the Court must be obeyed "unless there be some misapprehension which all mankind are subject to, and which may mislead him upon the plain reading of the order". Referring to that statement, Campbell J in Kirkpatrick v Kotis [2004] NSWSC 1265; 62 NSWLR 567, in a passage cited with approval by Beazley JA (McColl JA and Lindgren AJA agreeing) in Pang v Bydand Holdings Pty Ltd [2011] NSWCA 69, observed at [55]:

"...if an order is really not clear, it is unjust for someone to be punished for not obeying it. As well, though, the court approaches the question of whether the order is ambiguous on the basis that the recipient is expected to try to understand it and obey it. If a person taking that approach to the order could be in real doubt about what it meant, in a respect which is relevant to the particular charge of contempt which is brought, the charge will fail."

25 The orders made on 16 September 2010 do give rise to difficult questions of construction. Order 2 extended the orders made on 1 September 2010. Those orders were directed to Mr Paul and Associated Media and did not in terms prohibit him from paying living expenses and the like from his assets, which for the purposes of that order were defined to include the assets of the third respondent. Order 3 was directed to the third respondent "by itself, its employees, servants and agents". Those words did not bind other persons answering those descriptions, including Mr Paul, to comply with the order. They did, however, put such persons on notice that "they may be in trouble" if they knowingly assisted the third respondent to breach the order: Sigalla at [13]. In terms, order 3 is not qualified by the exception in order 11 of the orders continued by order 2. The subject matter of orders 2 and 3 overlaps. Order 2 treats the assets of the third respondent as assets of Mr Paul and permits him to deal with them for specific purposes. Order 3 is also directed to the assets of the third respondent and is not subject to the same qualification. On the face of it there is an inconsistency between orders 2 and 3. Order 2 does not prohibit Mr Paul from using funds of the company, which are treated as his assets, for specified limited purposes. Order 3 prohibits the company from using those assets for any purposes. The inconsistency could be resolved by reading order 3 as subject to the exceptions in the earlier order. It might also be resolved by treating the later and more specific order as prevailing; and as prohibiting what is not otherwise prohibited by order 2.

26 Mr Paul was charged with knowingly assisting a breach of order 3 by the third respondent. From his perspective the question is whether he understood or knew, as the appellants contend, that order 3 was not subject to the exceptions in the orders extended by order 2; those being the exceptions relating to living and other expenses. In answering that question it is not necessary to choose between possible meanings to be given to the two orders when read together or to decide whether order 3 was sufficiently clear to be enforced as against the third respondent.

27 The primary judge found that Mr Paul did not understand or know that order 3 was not subject to those exceptions because he mistakenly believed "that the exceptions in the freezing order of 1 September 2010 applied to the third order of 16 September 2010": [23]. The primary judge continued:

"[24] The extension until further order of the freezing order made on 1 September 2010 supports this mistaken belief. That extension included the exceptions. What Mr Paul did was to interpret the third order in conjunction with the second order so that he thought that the exceptions in the second order applied as well to the third order. He did not interpret the third order as a separate injunction divorced from the extension of the freezing order.

[25] That mistaken view was reasonably open to him and honestly held...."

28 On that basis, the primary judge concluded that the charge against Mr Paul should be dismissed. It was not established that he had knowledge that what was being done was inconsistent with the terms of the order: [20], [21], [27]. The appellants challenge that finding.

Issues in the appeal

29 The primary judge found that Mr Paul's mistaken belief was due to his interpreting order 3 in conjunction with order 2 so that he thought that the exceptions in order 2 applied as well to order 3: [23], [24]. The appellants say that finding involved error because Mr Paul had not received a copy of the orders until 19 October 2011 (ground of appeal 6). The finding is also challenged on the basis that the orders were "not ambiguous as to their terms" (ground of appeal 4). The appellants also argue that the primary judge erred when assessing Mr Paul's credit (grounds of appeal 3 and 5). Finally, they argue that the primary judge made a finding that Mr Paul knew the substance of the orders after receiving the letter of 9 March 2011 and should have concluded that he knowingly assisted in breaches of the order after that date (ground of appeal 2). The remaining grounds of appeal (grounds 1 and 7) challenge the holding that Mr Paul was not guilty of contempt. They do not give any other reasons why that conclusion is said to have involved error.

The order dismissing the charge of contempt

30 Addressing ground of appeal 6 first, there is a difficulty with the primary judge's finding as to how Mr Paul arrived at his mistaken belief that the exceptions in order 11 of the orders made on 1 September 2010 applied to order 3 made on 16 September 2010: [23], [24]. That reasoning assumes that Mr Paul understood order 3 as qualified by the exception in the earlier orders. The difficulty with this analysis is that Mr Paul's evidence was that he did not see and read the orders made on 16 September 2010 until he received a copy of the sealed order on about 19 October 2011. The primary judge made a finding to that effect: [14]. However, it does not follow that the primary judge's finding as to the first respondent's mistaken belief involved error. This is because there was other evidence which justified his Honour's conclusion.

31 As the position stood following the making of orders on 1 September 2010, there was no order directed against the third respondent and, by reason of the definition of "your assets" in order 8, its assets were assets which Mr Paul was permitted, by the exceptions in order 11, to use to pay living, legal and ordinary business expenses. His evidence was that after those orders were made he understood that he could use money in his bank account and that of the third respondent to pay "expenses for the company and living expenses". He also understood that there was to be an extension or "carry on" of the orders made on 1 September. In cross-examination he said (Black 46):

"As I said, my understanding was that I was - this was an extension of previous orders and I could continue to use the money to pay the expenses of the company, myself and basic living allowances."

and (Black 49-50):

"My understanding was that this was an extension of the 1 September court order. That was always my understanding, that I could use the monies for those reasons."

and (Black 52):

"I gave consent to a continuance of the previous orders. I wasn't aware of new orders."

and finally (Black 54):

"My defence is that my understanding was that I continue under 1 September under the rules that were put in place and put on me, that I effectively could continue to use my money to pay expenses as per the original court orders."

32 The primary judge did not form an adverse view as to Mr Paul's credit; and the appellants do not point to any uncontroversial or incontrovertibly established fact which contradicts the primary judge's finding, at [23], as to Mr Paul's belief. Nor is that finding glaringly improbable. As the primary judge said, it was "corroborated by the fact that all of the drawings that were made from the St George account fell within the exceptions": [26]. Those drawings were made between 22 September 2010 and 4 April 2011 (Black 50). Ground 6 does not justify the conclusion that the primary judge erred in the finding he made as to Mr Paul's understanding of the relevant orders.

33 There is one further matter. The appellants were required to prove beyond reasonable doubt that Mr Paul knew or understood the terms of the orders made on 16 September 2010 to be as they contend they should be read. The primary judge found that Mr Paul had a "mistaken" belief that the exceptions in the earlier order applied to the order made against the third respondent. It was not necessary for his Honour to make that finding. It was sufficient that he could not be satisfied beyond reasonable doubt that Mr Paul understood the orders as the appellants say they are to be understood. The appellants bore the onus of proving that Mr Paul knew the terms of the order. The primary judge's reference to Mr Paul having a "mistaken belief" is not to what is sometimes called "the Proudman v Dayman defence" or to any ground of exculpation which was relied on by him: see in the judgment of the plurality in CTM v The Queen [2008] HCA 25; 236 CLR 440 at [6]-[8] the caution against allowing such references to pre-empt questions of onus of proof. The judge's reference is to Mr Paul's understanding, which, according to the appellants' case, was "mistaken". Even if the primary judge's finding as to Mr Paul's knowledge was shown to be wrong, it did not follow that the evidence justified the finding sought in the appellants' case.

34 Ground of appeal 4 - that the primary judge erred in finding Mr Paul had a mistaken belief because the orders of 16 September 2010 were not ambiguous - is beside the point in circumstances where it is not shown that Mr Paul was provided with, or otherwise became aware of, the terms of all or some of those orders before 9 March 2011 at the earliest; and the source of his belief as to the terms of the orders was based upon his understanding of the earlier orders and that they had been extended. Furthermore, for the reasons outlined earlier, it is my view that the orders made on 16 September 2010 were unclear and ambiguous. The fact of that ambiguity is, to some extent, confirmed by the terms of the letter of 9 March 2011 from the appellants' solicitors which asserts that on 16 September "the operation of the freezing Orders was extended to the third defendant". Those orders included order 11, which permitted Mr Paul to use the third respondent's assets to pay living and legal expenses and business expenses bona fide and properly incurred. The same point is made by the primary judge at [25]. Ground 4 is not made out.

35 In support of grounds of appeal 3 and 5, the appellants make two arguments concerning the primary judge's conclusion that he did "not form an adverse view of Mr Paul's credit": [14]. First, they submit that the primary judge's observation, at [16], that Mr Paul had not been cross-examined upon his assertion that the withdrawals from the St George account fell within the exceptions to the freezing order was incorrect because Mr Paul was cross-examined as to the fact that the moneys expended were withdrawn from the third respondent's account. That criticism of the primary judge's observation is misconceived. His Honour was correct to observe that Mr Paul was not cross-examined on his evidence as to the purposes for which the withdrawals from that account were made. That those withdrawals were within the exceptions in the orders as Mr Paul understood them supported his evidence as to that having been his understanding. The fact that he was cross-examined as to whether those moneys came from the third respondent's account was not controversial and beside the point.

36 Secondly, the appellants argue that the primary judge erred when considering Mr Paul's credit in failing to take into account that he was "prepared to instruct his then legal representatives to consent to an injunction" on 30 August 2010 when he knew that the three accounts to which those orders were directed had been closed. This argument does not take account of Mr Paul's unchallenged evidence that after the three accounts were closed on 25 August 2010 he advised the lawyer acting for him of that fact (Black 23, 24). That being the position, there was no withholding of relevant information from his lawyer and nothing in the circumstances to suggest that any omission to advise the appellants or their lawyers of that fact involved conduct which in any way called into question Mr Paul's honesty or credibility. Neither of these arguments shows the primary judge to have erred in the view he formed as to Mr Paul's credit.

37 Finally, by ground of appeal 2, the appellants argue that the primary judge's finding, at [15], that Mr Paul agreed that shortly after 9 March 2011 he "knew full well" the substance or the content of the order made on 16 September 2010 required a conclusion that he was at least guilty of contempt after that time. That submission misunderstands the primary judge's finding, which was directed to his knowledge of the terms of the order rather than their effect or operation. This is clear from a consideration of the evidence. The first respondent was shown in cross-examination an extract of the letter dated 9 March 2011. It was pointed out that the letter described the terms of the order restraining the third defendant. Mr Paul then agreed that at the time he saw and read the letter he knew "the substance or the content of the order made" (Black 49). Mr Paul then agreed that he continued to pay expenses from the third respondent's account after he had received that letter. He said he did so because he "did what I believed I could do" (Black 49). Mr Paul then repeated his understanding that the 16 September 2010 order was "an extension of the 1 September" order permitting him to use the moneys as he was doing (Black 49-50). That understanding was consistent with the statement in the letter that "the operation of the freezing Orders" had been extended to the third respondent. The primary judge's observation at [15] was not as to Mr Paul's understanding of the effect of the orders and did not justify a conclusion that Mr Paul was aware of the effect of the orders, as contended for by the appellants, from that time.

38 None of the grounds of appeal in relation to the order dismissing the charge of contempt against Mr Paul is made out. There remains for consideration the grounds relied upon with respect to the ruling on the claim for privilege.

The order upholding claim to privilege

39 The appellants may only challenge this finding without leave if it is one "which affected the final result". The appellants do not otherwise seek leave to appeal from this order.

40 The appellants cannot and do not say that any error of the primary judge in upholding the claim to privilege did or would have made a difference to the outcome of the contempt proceeding. The highest that they put that argument is that the 4000 documents to which they sought access might have contained a written communication, or note of an oral communication, between the accountant and Mr Paul or his solicitor which indicated that Mr Paul was aware of the "true interpretation" of the orders, being that which they contended for. The appellants accepted in oral argument that they had no basis for believing that there would be such material in the documents produced. They conceded (Tcpt 10/09/13, p 11) that the subpoena was issued "hoping that there might be such material". It was accepted that there was no such material in the documents produced by Mr Paul's solicitor in relation to which privilege had been waived.

41 It is not necessary to address whether the primary judge erred in upholding the claim for privilege. It has not been shown that the order doing so "affected the final result". For that reason grounds of appeal 8, 9 and 10 do not arise.

Conclusion

42 The appeal should be dismissed with costs.

43 BARRETT JA: I concur.

44 GLEESON JA: I agree with Meagher JA.

**********

Decision last updated: 17 December 2013