Burton v Spencer [2015] QSC 187

SUPREME COURT OF QUEENSLAND CITATION: Burton v Spencer [2015] QSC 187 PARTIES: DAPHNE BURTON (Applicant) v KENT RICHARD SPENCER (Also known as Kenneth Richard Spencer) (Respondent) FILE NO/S: SC No 478 of 2014 DIVISION: Trial PROCEEDING: Application ORIGINATING COURT: Supreme Court at Cairns HEARING DATE: 23 February 2015; 26 February 2015; 5 March 2015. DELIVERED ON: 25 June 2015 DELIVERED AT: Cairns JUDGE: Henry J ORDER: 1. The respondent has committed a contempt of the order of North J made on 13 December 2012. 2. I will hear the parties as to when the court should proceed to determine punishment for the contempt. 3. Application for a declaration under r 371(2) and orders the respondent is in contempt of the orders of 31 January 2013 and 22 July 2014 dismissed. 4. Costs reserved. CATCHWORDS: PROCEDURE – CONTEMPT, ATTACHMENT AND SEQUESTRATION – CONTEMPT-WHAT CONSTITUTES – DISOBEDIENCE OF ORDERS OF COURT – OTHER CASES – where the respondent was granted letters of administration of the estate of the deceased – where an application to revoke the grant was made by the -- 1 of 31 -- 2 deceased’s mother and granted – whether the respondent had dealt with the estate property and failed to properly provide estate accounts in contempt of the Court’s orders – whether the contempt was wilful PROCEDURE – PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – TIME – OTHER MATTERS – where r 665(3) requires a penal endorsement on an order that a person perform an act – where orders were made without a penal endorsement – whether the absence of a penal endorsement precludes a finding of contempt – whether the respondent was disadvantaged by the absence of a penal endorsement Uniform Civil Procedure Rules 1999 (Qld) r 371, r 374, r 648, r 665 Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98, cited ASIC v 1st State Home Loans Pty Ltd & Anor [2002] QSC 55, cited Camm v ASI Development Company Pty Ltd [2007] QCA 317, applied Costello v Courtney [2000] QSC 67, considered Re Intex Consultants Pty Ltd [1986] 2 QdR 99, distinguished Witham v Holloway (1995) 183 CLR 525, cited COUNSEL: Mr JA Greggery for the Applicant Mr SC Keim SC for the Respondent SOLICITORS: Connolly Suthers Lawyers for the Applicant Preston Law for the Respondent Introduction [1] Sharon Burton died intestate on 6 July 2012. On 14 August 2012 the respondent Mr Spencer obtained letters of administration of Sharon’s estate. [2] A premise of the grant was that Mr Spencer had been Sharon’s de facto partner. Sharon’s mother disputed that he had been. She sought a declaration to that effect, a revocation of the grant of letters of administration to Mr Spencer and the making of a grant to her instead. That application, filed 7 December 2012, was upheld in a judgment delivered by North J on 23 June 2014. -- 2 of 31 -- 3 [3] The present application alleges contempt by Mr Spencer of two orders which were made between the filing of the application and judgment and one order made soon after judgment, viz: 1. an order of North J of 12 December 2012 restraining Mr Spencer from dealing with the deceased property (“the first order”); 2. an order by me of 31 January 2013 requiring the filing of an estate account pursuant to r 648 Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”)(“the second order”); and 3. a further order of North J of 22 July 2014 also requiring the filing of an estate account in compliance with r 648 (“the third order”). [4] It is conceded Mr Spencer was in contempt of the first order. However the parties diverge about the extent of that contemptuous conduct and a determination about that is required. [5] Notwithstanding that the parties agreed Mr Spencer was in contempt it was common ground at the hearing that any determination of punishment ought await the outcome of an appeal against the decision of North J.1 The rationale for waiting was that if, contrary to the decision of North J, Mr Spencer was in fact a de facto of the deceased his dealings with the deceased’s property in contempt of the first order is, at least arguably, less serious than if he was not in fact her de facto. [6] Last week the Court of Appeal upheld the appeal against the decision of North J but remitted the matter to the trial division for re-hearing.2 That does not preclude me making findings in this decision as to whether Mr Spencer was in contempt. However, because of the new need for a determination afresh of whether or not Mr Spencer was the deceased’s de facto, I should hear further submissions from the parties as to when it will be appropriate to proceed to determine punishment. [7] As to the second and third orders, documents were filed in purported compliance with the orders. The documents did not comply with the requirements of an estate account pursuant to r 648. The respondent does not concede those non-compliances were contemptuous. 1 This has the consequence that some issues pursued in evidence and submissions at the hearing, which are ultimately relevant to penalty rather than liability, do not require analysis in these reasons. 2 Spencer v Burton [2015] QCA 104. -- 3 of 31 -- 4 [8] The essential difference in the controversy regarding non-compliance with the first order compared to the other two is that dealing with estate assets, knowing a court has said not to, bespeaks a wilful breach of the order. In contrast the estate account content requirements of r 648 are more vulnerable to non-compliance though short of contempt. Legal Principles [9] The application for punishment for contempt of court orders is made pursuant to division three, part six of chapter 20 of the UCPR. Rule 930 provides that if on the hearing of such an application a court decides that the respondent has committed a contempt: “[T]he court may punish the respondent by making an order that may be made under the Penalties and Sentences Act 1992.” [10] Thus the court may punish the contempt as if it were a criminal offence. Proof to the criminal standard is required.3 [11] The applicant must prove the allegedly contemptuous commission or omission was wilful. This does not require proof of stubborn opposition to or obstinate disregard of the court’s order4 although the presence of a specific intent to defy the authority of the court will be relevant to penalty.5 A deliberate commission or omission that is in breach of the court’s order will constitute wilful disobedience of the order unless it is casual, accidental or unintentional.6 First Order Breached? The order [12] On 13 December 2012 in the Townsville Supreme Court North J ordered that: “The respondent is restrained from selling, leasing, mortgaging, charging, encumbering, or in any way dealing with the deceased’s property, including real property, until such further order of the court.” 3 Witham v Holloway (1995) 183 CLR 525, 534; Hinch v Attorney General (Vic) (1987) 164 CLR 15, 49. 4 Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98. 5 ASIC v 1st State Home Loans Pty Ltd & Anor [2002] QSC 55 [4]. 6 Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98. -- 4 of 31 -- 5 [13] That order was made with the consent of the parties, each of whom were legally represented. The alleged breaches [14] The applicant advanced evidence that Mr Spencer had applied estate funds for his own purposes prior to the making of the order but with knowledge that such an order was to be applied for. He well knew what the consequences of such an order would be7 but his pre-order conduct is irrelevant to liability for it cannot be said to have breached an order of the court. At best it might inform an assessment of appropriate punishment. [15] The application alleged a number of breaches of the first order. Breaches (a) and (b) are no longer relied on. Breach (c) [16] Breach (c) is alleged to be: “Dealing with interest payments from estate funds from 13 December 2012 to on or about 7 March 2014.” [17] Between 21 August 2012 and 25 September 2012 Mr Spencer invested $400,000 of estate funds in term deposit bank accounts in his name: four lots of $50,000 each in term deposits (accounts xx5476, xx5477, xx5478 and xx5479) with Queensland Teachers Mutual Bank (“QTMB”) and two lots of $100,000 each in term deposits with the Commonwealth Bank (“CBA”)(accounts xx4468 & xx4599). [18] On 17 October 2013, 6 November 2013 and 2 December 2013 the applicant asked the respondent to account for the interest on the funds in the fixed deposits. On 17 December 2013, over a year after the making of the first order, Mr Spencer’s solicitor informed the applicant’s solicitor that: “The interest from the term deposits was paid into two other accounts in our client’s name. This was so before and after the injunction was imposed. As a result, these monies became mixed with our client’s own monies and we are instructed that the estate monies were utilised by our client in a period after the trial concluded.” 7 T1-15 L27, T1-108 L 25. -- 5 of 31 -- 6 [19] While the initial movement of the funds into term deposits occurred prior to the first order the funds were readily identifiable as funds of the estate and readily identifiable interest payments on those funds were made after the order. [20] Interest totalling $13,480.84 was paid on the four QTMB term deposits between 20 February 2013 and 3 March 2014. Of that total, amounts totalling $7,279.08 were transferred to another account the respondent held with QTMB (account xx4777) and amounts totalling $6,268.60 were withheld as tax for transfer to the Australian Tax Office (“ATO”) to the respondent’s benefit. [21] Interest totalling $4,947.17 was paid on one of the CBA term deposits (xx4468) between 18 December 2012 and 6 March 2014. Of that total, amounts totalling $2,662.17 were transferred to an account the respondent held with the CBA (account xx1477) and amounts totalling $2,285 were withheld as tax for transfer to the ATO to the respondent’s benefit. [22] Interest totalling $4,911.80 was paid on the other CBA term deposit (xx4599) between 18 December 2012 and 1 March 2014. Of that total, amounts totalling $2,647.80 were transferred to accounts the respondent held with CBA, there being a total of $717.98 to one account (account xx1477) and a total of $1,929.82 to another account (account xx5664). Also from that total, amounts totalling $2,264 were withheld as tax for transfer to the ATO to the respondent’s benefit. [23] The total interest payments on the various term deposits after the first order was therefore $23,339.81, of which $12,589.05 was transferred to Mr Spencer’s own accounts and $10,817.60 was withheld as tax for transfer to the ATO to the respondent’s benefit. [24] It is not clear that Mr Spencer directly caused the transfer of funds to the ATO. To the extent Mr Spencer caused such transfers the prospect that he did so casually, accidentally or unintentionally, and thus not contemptuously, has not been excluded. That is not to say he is not liable to account for those funds but it is important not to confuse this contempt proceeding with the taking of an account. -- 6 of 31 -- 7 [25] I readily infer Mr Spencer must have arranged for the transfer of that component of the interest payments which was transferred to his accounts. Even if some or even all such arrangements had been made prior to the order of 13 December 2012 - and they were not8 - the continuation of the arrangements, involving transfers of estate property, constituted dealings with the property, contrary to the order. Those dealings were wilful, even if only the product of omission by Mr Spencer. They were not merely casual, accidental or unintentional. It must be remembered Mr Spencer controlled the term deposit accounts from which the interest was being transferred. Moreover Mr Spencer had no significant monetary assets and would have known the quantum of his income from his employment when he was working. I have no doubt, even allowing for the distraction of personal stressors, that he knew the extra money coming into his accounts must have been estate property. [26] It is no answer to say that the interest payments (less withholding tax) transferred to his accounts were mixed with his funds. The transfers to his accounts were of themselves dealings with the estate property, caused as they must have been by his own acts or omissions in his personal or electronic dealings with the relevant banks. His ensuing expenditures fortify my conclusion that his conduct through act or omission in causing the continuing transfers was wilful. [27] Mr Spencer has asserted he encountered some financial hardships although he conceded he had brought some such hardship upon himself by his significant expenditure on “drinking, gambling and smoking”.9 In any event, financial hardship is not inconsistent with my conclusion that his behaviour was wilful. It is obviously a topic of potential future relevance in the context of punishment. So too is the topic of how much has been repaid. [28] Breach (c) has been proven to be a wilful breach of the order, at least so far as it relates to the $12,589.05 of interest transferred to Mr Spencer’s accounts, as distinct from interest withheld for the ATO . 8 For example interest out of CBA Term Deposit account xxx4599 was to 25 February 2013 directed to CBA Smart Access account xx 1477 but from 25 March 2013 was directed to CBA Netbank Saver account xx5664 – per affidavit of Brenda Jean Mudie ex p92. 9 T1-62 L27. -- 7 of 31 -- 8 Breach (d) [29] Breach (d) of the first order is alleged to be: “Dealing with rental income from unit 3/86 Ogden Street, Townsville from 22 June 2013 to 1 April 2014.” [30] The deceased was the legal owner of a one bedroom unit, number 3, in the Metro Quays apartment complex in Ogden St, Townsville. Mr Spencer deposed that he and the deceased rented a three bedroom unit, number 64, at the same complex and rented out the one bedroom unit. He explained the rental paid by the tenant of the one bedroom unit was directed to a bank account of Mr Spencer’s from which rent for the three bedroom unit was paid, so as to in effect reduce the amount of money they had to pay towards rent for the three bedroom unit. [31] That arrangement was continued after death and after the first order. The applicant has refrained from asserting it was contemptuous, at least while the three bedroom lease remained on foot, presumably because both Mr Spencer’s and the deceased’s names were on the lease. However the lease on the three bedroom unit expired on 22 June 2013. From then, in light of the first order, Mr Spencer had to have realised he could no longer deal with the rent paid on the one bedroom unit because it was estate property. [32] From 1 July 2013 to and including 3 March 2014 seven payments of rent for the one bedroom unit, a total of $10,403, were made into Mr Spencer’s CBA Smart Access account (xx1477). That money was estate property and not his to deal with. [33] Mr Spencer admitted he did continue to deal with the rent, deposing: “I knew that, since the expiry of the lease on Unit 64 in the middle of the year, I had been wrongly utilising the rent account for non-estate purposes.”10 [34] This is a concession of wilful conduct, not casual, accidental or unintended. [35] Breach (d) has been proven to be a wilful breach of the first order. 10 Affidavit of Kent Richard Spencer [58]. -- 8 of 31 -- 9 Breach (e) [36] Breach (e) of the first order is alleged to be: “Expending the sum of $25,000 of estate funds over a period of time commencing 13 December 2012.” [37] In an amended estate account provided by Mr Spencer’s lawyers on 3 November 2014 Mr Spencer disclosed he had expended $25,000, stating it was part of a greater sum of expenditure: “This amount included a cash component of $25,000 that was spent by Mr Spencer post 13 December 2012.” [38] He did not provide particulars of those expenditures. [39] On 20 August 2012 an amount of $398,200 of the deceased’s property was paid into Mr Spencer’s CBA Streamline account, number xx9946.11 The nature of the transactions ordinarily recorded in the bank statements for that account show it was an account used by Mr Spencer for day-to-day expenditure. In the months prior to the deposit the account had predominantly been in debit. On 21 August 2012 $150,000 was transferred from that account and a further $100,000 was transferred from it on 23 August 2012. Both amounts were transferred to Mr Spencer’s CBA Netbank Saver account, number xx5664. The account statements for this account12 show it was used as the account into which Mr Spencer’s modest carer’s pension of $114 a fortnight was deposited before being transferred to the above-mentioned account xx9946. He regularly monitored those deposits.13 There were no funds in the account immediately before the above- mentioned transfers. [40] By the close of 13 December 2012 Mr Spencer had transferred most of the $250,000 worth of the deceased’s property out of account xx5664, with only $25,000 remaining in the account. Given the continued pattern of transferring the carer’s pension this balance of $25,000 was readily identifiable as the deceased’s property. Mr Spencer had to have known it was estate funds given the above circumstances. It should not have been dealt with at all once the first order was made. However that $25,000 was not 11 Affidavit of Brenda Jean Mudie ex p100. 12 Affidavit of Kent Richard Spencer ex p1. et seq. 13 T1-38 L36, T1-54 L37. -- 9 of 31 -- 10 isolated and the balance of the account dwindled downwards as various amounts were transferred to Mr Spencer’s day-to-day account xx9946 at a rate far exceeding the quantum of non-estate sourced funds coming into the account. [41] Annexure E to the applicant’s outline annexed a schedule of transfers from account xx5664 made after the first order, which actually exceed a total of $25,000. Because additional funds came into the account during this period of dissipation it is not possible to identify every transfer out as entirely attributable to estate as opposed to non-estate sources. However the substantial disproportion in the contribution pool as between those sources compels the inference that a substantial proportion of the transfers out had to have been of the deceased’s property. This in turn compels the inference that in breach of the first order there was some wilful dealing with a substantial proportion of the $25,000 of the deceased’s property held in Mr Spencer’s account after the making of the first order. [42] Mr Spencer deposed that some transfers from account xx5664 were used, directly and indirectly, to pay debts of the estate, principally rates and body corporate levies.14 That would not mean such dealings were not dealings with the deceased’s property contrary to the order, although it is obviously relevant to punishment. [43] The first order prevented Mr Spencer “in any way dealing with the deceased’s property”. The breach alleged is “expending” the sum of $25,000 of estate funds after the first order. That requires more to be proved than merely “in any way dealing” with the funds. Given the above reasons I am not prepared to conclude $25,000 of the deceased’s property was “expended” in breach of the first order. However I have found there was some wilful “dealing” with a substantial proportion of the $25,000 of the deceased’s property held in Mr Spencer’s account after the making of the first order. That did constitute a breach of that order. Breach (f) [44] Breach (f) of the first order is alleged to be: 14 Affidavit of Kent Richard Spencer [43-51]. -- 10 of 31 -- 11 “Dealing with the sum of $13,026.44 from 21 July 2013 to 17 October 2013.” [45] On 12 February 2013 $8,060.36, the interest inclusive amount left in the deceased’s QTMB account xx3038 when it was closed that day, was transferred to Mr Spencer’s QTMB current account number xx4777 which before that only had a balance of about $20.15 [46] Further, sums of interest from term deposits of the deceased’s money (see breach (c) above) were transferred into account number xx4777 thereafter and the balance climbed to about $10,000. From 21 July to 17 October, according to the account statement, $13,044 was withdrawn from the account in automatic teller transactions.16 The applicant’s calculation of those entries gives rise to a slightly lesser total of $13,026.44, which I will adopt for the purpose of liability. In any event it is clear those withdrawals all constituted dealings with the property of the deceased. It was wilful conduct. There is no serious prospect it was done casually, accidentally or unintentionally. Mr Spencer well knew the funds in this account, in the form of the large transfer from the former account and the interest payments on term deposits of her monies, were the deceased’s property. It is quite obvious from the frequency of the ATM withdrawals that, even allowing for the distraction of personal stressors, Mr Spencer knew he was rapidly dissipating the deceased’s property. His assertion in evidence that he did not realise he was spending the interest was inherently implausible.17 [47] Breach (e) has been proven to be a wilful breach of the first order. Breaches (g) and (h) [48] Breach (g) of the first order is alleged to be: “Dealing with the sum of $1,000 on 13 December 2012.” [49] Breach (h) of the first order is alleged to be: “Dealing with the sum of $5,000 on and from 13 December 2012 to 14 June 2013.” 15 Second affidavit of Esetia Jane Cox ex p104, ex p129. 16 Second affidavit of Esetia Jane Cox ex pp130-132. 17 T1-71 L38. -- 11 of 31 -- 12 [50] These alleged breaches are connected. Each relates to funds transferred from Mr Spencer’s CBA Netbank Saver account number xx5664 to his day-to-day use CBA Streamline account xx9946, namely $1,000 transferred on 12 December 2012 and $5,000 transferred on 13 December 2012. [51] It will be recalled substantial amounts of the deceased’s money had been transferred to account xx5644, which was otherwise the initial repository of the payments of his carer’s pension, which payments were in turn also transferred to xx9946. It is readily apparent from a perusal of the statement of that account that the transfers of $1,000 and $5,000 on 12 and 13 December 2012 must have been of the deceased’s property, as distinct from Mr Spencer’s carer’s pension, and Mr Spencer would well have realised that. [52] The $1,000 amount transferred into account xx9946 on 12 December 2012 was withdrawn on 13 December, leaving a balance of $268.20 before the subsequent arrival that day of the $5,000 transfer. It is not known whether the $1,000 was withdrawn before or after the first order was made that day. It follows there must be a reasonable doubt as to whether that dealing by withdrawal was in breach of an existing order. Alleged breach (g) must fail. [53] As to breach (h), the transfer of the amount of $5,000 into the account on the day of the making of the first order cannot be shown to have occurred after rather than before the order was made that day so that transfer cannot of itself be proved to be a dealing with the deceased’s property contrary to the order. The argument instead appears to be that the amount was dealt with between then and the middle of the following year. [54] There were other deposits into that account thereafter, including of Mr Spencer’s salary. There were also multiple withdrawals. The balance was preserved comfortably above $5,000 despite various debits and credits until on 8 February 2013 a withdrawal transfer of $6,180.89 was transferred to Mr Spencer’s CBA Smart Access account xx1477. However, contrary to the position discussed above in respect of breach (e), the mix of transactions on the account means I am unable to infer there was some wilful “dealing” with a substantial proportion of the $5,000 of the deceased transferred to Mr Spencer’s account. -- 12 of 31 -- 13 [55] It follows neither of alleged breaches (g) and (h) are proved. It is presently unnecessary to consider whether the last minute movements of the funds, well knowing an order was about to be made, will be of relevance to informing punishment for the contemptuous conduct which did occur after the order. Contempt of first order? [56] My adverse findings in respect of breaches (c), (d), (e) and (f) have explained the way and extent to which in each instance I am satisfied Mr Spencer was in wilful, not merely casual, accidental or unintentional, breach of the order. [57] I am satisfied beyond a reasonable doubt that Mr Spencer has committed a contempt of the first order by his wilful: (i) dealing with $12,589.05 of interest payments made on term deposits of the deceased’s money (breach (c)); (ii) dealing with $10,403 of rental payments received in respect of the deceased’s unit (breach (d)); (iii) dealing with a substantial proportion of $25,000 of the deceased’s money held in his account (breach (e)); (iv) dealing with $13,026.44 of the deceased’s money in the form of principal and interest held in his account (breach (f)). Second order breached? The order [58] On 31 January 2013 in the Cairns Supreme Court I ordered that: “On or before 14 February 2013, the respondent shall file an estate account of the estate of Sharon Anne Burton pursuant to r 648 of the Uniform Civil Procedure Rules 1999 (Qld)” -- 13 of 31 -- 14 [59] I also made orders relating to the exchange of affidavits and the future review of the matter. Threshold legal issue [60] A potential legal impediment to the applicant’s case in respect of this second order, as well as the third order, is that each were orders positively requiring Mr Spencer to take action. In contrast, order one merely required that he refrain from certain action. The distinction bears upon the form that the second and third orders should have taken. Rule 665(3) of the UCPR provides: “665 Time for compliance … (3) An order requiring a person to perform an act must have written on it or attached to it the following statement or a statement to the same effect— ‘If you, [state name of person required to perform act] do not obey this order within the time specified, you will be liable to court proceedings to compel you to obey it and punishment for contempt.’ ” (emphasis added) [61] The second and third orders required Mr Spencer to perform an act but did not contain or annex the statement (“the penal endorsement”) as required by r 665(3). Mr Spencer’s counsel submits that omission is fatal to the application as it relates to the second and third orders. [62] The applicant submits the requirement for the statement in r 665(3) to be in writing indicates r 665(3) relates to orders which are required to be served on persons. The applicant contends in effect that the rationale for the provision of the written statement is a person who has not been privy to the making of the order should be informed of the need to comply with it or be punished for contempt. Here the order was made to a party in the proceedings, with the consent of that party. The order did not need to be served on Mr Spencer. Nor it is submitted did Mr Spencer, already a party in the proceeding, need to be told he had an obligation to comply with orders made in the proceedings. Thus it is submitted orders 2 and 3 did not need the statement in r 665(3) written on or attached to them. -- 14 of 31 -- 15 [63] However the words of r 665(3) are unambiguous. The rule does not distinguish between whether or not the person required to perform an act is a party to the proceeding.18 That is consistent with the result in Costello v Courtney19 where the court declined a contempt application against a party to the proceeding where that party had not had the benefit of the penal endorsement required by r 665(3). [64] Orders 2 and 3 were clearly orders “requiring a person to perform an act”. They should have had the r 665(3) penal endorsement written on or attached to them even if they did not need to be served on Mr Spencer. But what is the significance of the non- compliance? Does it automatically prevent contempt proceedings succeeding in that the orders to which the proceedings related failed to comply with the rules or is it a relevant consideration in determining whether the respondent ought be held liable for contempt. [65] Here the applicant submits it is the latter. There is considerable force in the argument it cannot be the former, in that pursuant to r 371(1) a failure to comply with the rules does not render an order made a nullity. However courts have declined to uphold contempt applications where r 665(3) has not been complied with.20 The applicant has therefore taken the precaution of also applying for an order under r 371(2) declaring the second and third orders effectual despite the absence of the r 665(3) penal endorsement. [66] A self-evident purpose of r 665(3) is to facilitate compliance with court orders by ensuring the person being ordered to perform an act is aware that a failure to comply may result in the person being compelled to comply and be punished for contempt. Keane JA identified a related purpose in Camm v Development Company Pty Ltd: “The rule is also apt to ensure that the recipient of the order is given fair notice that non-compliance may give rise to proceedings for contempt so that the recipient may so conduct himself or herself as to avoid or minimise that peril” [67] His Honour with whom Muir JA and Douglas J agreed, observed: “[B]ecause observance of the procedure prescribed for the pursuit of applications affecting the liberty of the subject is a matter strictissimi iuris, a court should not excuse non-compliance with the rules unless it can be 18 19 [2000] QSC 67 20 Camm v ASI Development Company Pty Ltd [2007] QCA 317. -- 15 of 31 -- 16 satisfied that the person sought to be imprisoned has not been disadvantaged by the non-compliance.”21 [68] In Camm, where Mr Camm had not been legally represented, the Court of Appeal was not satisfied Mr Camm was not disadvantaged by the non-compliance and concluded the non-compliance should not have been excused below with the result that Mr Camm’s appeal succeeded.22 [69] If it can be concluded from the circumstances of a case that, even without an order having r 665(3)’s penal endorsement, a respondent knew that non-compliance with the order may result in punishment for contempt then the absence of the penal endorsement to which the respondent was entitled under the rules will have worked no disadvantage. If it cannot be so concluded it follows from the decision in Camm that the court should not excuse the non-compliance and should not hold the respondent in contempt of the order. [70] The fact the respondent here was legally represented is a relevant consideration in assessing whether the applicant was disadvantaged by the non-compliance with r 665(3). However it is not determinative. It is prudent to first consider the circumstances attending the alleged breaches before reaching a final view as to whether I am satisfied the respondent has not been disadvantaged by the non-compliance. The alleged breaches [71] In accordance with the second order the respondent purported through his solicitor to file an estate account of the estate of Sharon Anne Burton on 14 February 2013. While such a document was filed in time the difficulty is that it did not comply with the requirements of, or, to use the order’s language, was not “pursuant” to r 648(1) of the UCPR. Rule 648(1) provides: “648 Requirements of estate account (1) An estate account must give an account of the property of the estate to which it applies and include the following— 21 Camm v ASI Development Company Pty Ltd [2007] QCA 317. 22 Compare Re Intex Consultants Pty Ltd [1986] 2 QdR 99 where the respondent had the benefit of legal representation. -- 16 of 31 -- 17 (a) clear and succinct particulars of all transactions that have occurred in respect of any bank or trust account relating to the estate; Example of how paragraph (a) may be complied with— The particulars may be set out in spreadsheet format in chronological order, with— (a) each receipt and disbursement divided into capital and income components; and (b) running column totals at the bottom of each page and top of each successive page; and (c) progressive calculations of total funds on hand. (b) an inventory of the estate; (c) all distributions under the will (including the will as varied by a court order), trust instrument or on intestacy for the estate; (d) the value of all distributions and assets remaining on hand, reconciled to the net balance of the estate; (e) the changes in any investments made in the course of administration; (f) details of any other dealings with the property of the estate.” [72] On 14 February 2014 Mr Spencer’s solicitor filed an affidavit by Mr Spencer deposing that annexure A thereto was “an account of the estate”. The annexure was so brief it is convenient to quote it in full without its full heading: “Account of Administration and of the Receipts and Disbursements of Kent Richard Spencer the administrator under a Grant of Letters of Administration granted 14 August 2012 in the Supreme Court of Queensland in Townsville from the 14th day of August 2012 to 12 February 2013. Administrators Account Part A Receipts No of Item Date received Name of Person from whom Received On What Account received Amount received, Proceeds of assets realised or collected ($) Income ($) 1 17 August 2012 Queensland Teachers Mutual Bank Closure of loan and savings account of 607,380.92 -- 17 of 31 -- 18 deceased (total is amount after loan/mortgage is discharged) Disbursements No of Item Date when paid Name of Person to whom paid or allowed On What Account Paid or allowed Amount paid or allowed from capital ($) 1. 12 July 2012 Hiram Philip Funerals Funeral Expenses 11,834.81 2. 6 September 2012 Purcell Taylor Lawyers Legal fees to obtain Grant of Letters of Administration including court filing and advertising costs 2,367.40 3. 1 October 2012 Townsville City Council Local Government Rates for 3/86 Ogden St, Townsville 1,171.71 4. 1 October 2012 DEFT Body Corporate Body Corporate Levies 1,674.08 Assets (not yet distributed) 1. Real Property – 3/86 Ogden St, Townsville - $220,000 approximate value. 2. Furniture within 3/86 Ogden St, Townsville - $10,000.00 approximate value.” [73] In fairness it is noteworthy that Mr Spencer’s affidavit annexing the account did contain this additional factual information of relevance: “3. On 17 August 2012 upon application from myself the Queensland Teachers Mutual Bank transferred $607,380.92 to me being the balance of moneys held in the name of Sharon after the mortgage loan account of $85,550.30 was discharged. -- 18 of 31 -- 19 4. $200,000.00 is currently invested in four (4) lots of $50,000.00 each in separate term deposits in my name at the Queensland Teachers Mutual Bank. 5. $200,000.00 is currently invested in two (2) lots of $100,000.00 each in separate term deposits in my name at the Commonwealth Bank of Australia. 6. On 27 August 2012 I gifted $45,000.00 in accordance with Sharon’s wishes to the following persons in the following amounts: (a) Andrew James Burton - $10,000.00; and (b) Ashleigh Jennifer Corrallie Burton - $10,000.00; (c) Asher James Burton - $5,000.00; (d) Matthew Charlie Morton - $5,000.00; (e) Lachlan David James Burton - $5,000.00; (f) Rowena Jade Burton - $10,000.00. 7. On the same day I also gifted the amount of $55,000.00 to Daphne Burton after discussions with Peter Burton. 8. On 27 August 2012 I also handed to Sharon’s brother Peter Burton to deliver to Sharon’s mother Daphne all of Sharon’s jewellery except for a diamond ring that I gave Sharon in 2008 as a gift.” [74] It is unclear why that information was not included in the account document, annexure A, particularly given Mr Spencer was legally represented. [75] Even taking the affidavit content into account in addition to the annexure, it is self- evident that this purported estate account fell far short of the content requirements of r 648(1). For instance, in obvious breach of r 648(1)(a), it did not give clear and succinct particulars of transactions that had occurred in respect of any bank account relating to the estate. [76] In this application seven breaches were alleged but breach (d) was abandoned before the hearing and breach (b) was abandoned during the hearing. Breach (a) [77] Breach (a) of the second order is alleged to be: “Failing to commence the account on 6 July 2012.” -- 19 of 31 -- 20 [78] The account purported to run from 14 August 2012, the date of the grant of letters of administration to Mr Spencer, rather the date of death, 6 July 2012. Had it commenced earlier and been complete it would have revealed earlier dealings by Mr Spencer with estate funds, provoking inevitable complaints as to his conduct. It would for example have shown a transfer of $20,307.81 from QTMB account xx9990 to QTMB account xx3038 on 12 July 2012. From this it would have been ascertainable that the implied representation in his account of having paid disbursements of $11,384.81 for funeral expenses from his own money was incorrect. [79] Despite the covert advantage to Mr Spencer of commencing the account from the date of the grant it does not follow he knew he was obliged to commence it earlier and that he was in breach of the order by only commencing it then. In the absence of greater particularity in the second order the respondent’s position has to be that r 648 ought be interpreted as obliging Mr Spencer to provide an account that dealt with the era preceding his appointment. It is unnecessary to determine whether he was so obliged at law because even if he was and therefore did not comply with the order, the interpretation point presents as sufficiently uncertain that there would linger the real prospect such non-compliance fell into the category of casual, accidental, or unintended. [80] It follows the failure to commence the account from the date of death does not constitute a contempt. Breach (c) [81] Breach (c) of the second order is alleged to be: “Failing to give particulars of the bank account from which the disbursement of $11,834.81 paid to Hiram Philip Funerals on 12 July 2012 was made.” [82] This allegation has the same temporal problem as that above in that it relates to pre- grant activity. For the same reason as above it does not constitute a contempt. Breach (e) [83] Breach (e) of the second order is alleged to be: -- 20 of 31 -- 21 “Failing to account for the sum of $102,167.73 being the difference between: (i) the sum of $607,380.92 in paragraph 3; and (ii) the disbursements term deposits totalling $400,000 in paragraphs 4 and 5, disbursements totalling $100,000 in paragraph 6 and 7 and the disbursements in items 2, 3 and 4 totalling $5,213.19 in annexure A.” [84] The paragraph references in this alleged breach are to the affidavit. The mathematical fact of the monetary amount unaccounted for is obvious, so obvious it is surprising such an elementary shortcoming would be present in an estate account prepared for a legally represented person. Omission of accounting for the amount must mean the account failed to include a full inventory of estate assets and or failed to include clear and succinct particulars of all bank transactions that occurred in movement, dissipation or investment of that amount. [85] The omission of that information was a breach of the order. Whether or not it warrants a contempt finding is discussed below. Breach (f) [86] Breach (f) of the second order is alleged to be: “Failing to give clear and succinct particulars of all transactions relating to the rental income from unit 3/86 Ogden Street.” [87] The account alludes to the estate’s ownership of unit 3 but makes no reference to rental income from it. It will be recalled that rent paid on the deceased’s one bedroom unit at 3/86 Ogden St was being used to subsidise the rental paid on a three bedroom unit rented by the deceased and Mr Spencer, the original tenancy for which was still current at the date of the second order. This use benefitted Mr Spencer. It involved, to adopt the nomenclature of r 648, bank transactions that were not included in the estate account and dealings with estate property, viz, the rent received, which were not included in the estate account. [88] The omission of such information was a breach of the order. Whether or not it warrants a contempt finding is discussed below. -- 21 of 31 -- 22 Breach (g) [89] Breach (g) of the second order is alleged to be: “Failing to give an account of the changes to the investments of the sums of $400,000 by reference to date, interest payments, and bank account.” [90] The estate account mentioned the existence of the term deposits yet made no reference to any of the eleven interest payments23 that had by the time of the order been paid. As with the rent, the interest payments involved bank transactions that were not included in the estate account and dealings with estate property that were not included in the estate account. [91] The omission of such information was a breach of the order. Whether or not it warrants a contempt finding is discussed below, collectively with the breaches of the third order. Third order breached? The order [92] On 22 July 2014 in the Townsville Supreme Court Justice North ordered: “That on or before 4pm on 5 August 2014 the respondent file and serve an estate account which complies with r 648 of the Uniform Civil Procedure Rules 1999 (Qld) which account:– (a) Commences on 6 July 2012; (b) Contain clear and succinct particulars of all transactions that have occurred in respect to any banking account or trust account relating to the estate; (c) An inventory of the estate; (d) The changes in any investments made in the course of administration; and (e) Details of any other dealings with the property of the estate.” [93] The timing of the application24 for the order was unusual. It was filed 4 April 2014 at a time after the hearing but before the delivery of judgment. It was adjourned and when 23 Identified in annexure D to the application. 24 Affidavit of Esetia Jane Cox ex p43. -- 22 of 31 -- 23 steps were taken after the delivery of judgment to have the matter listed for determination, the respondent consented to the making of the third order. Threshold legal issue [94] As with the second order the third order did not contain the punitive endorsement required by r 665(3). The above discussion of the significance of that omission therefore also applies in respect of the alleged contempt of the third order. The alleged breaches [95] In accordance with the third order the respondent purported through his solicitor to file an estate account of the estate of Sharon Anne Burton on 5 August 2014.25 It was lengthier and more detailed than the account filed in response to the second order. [96] There was subsequent correspondence between the parties about the adequacy of the estate account. [97] By letter dated 3 November 2014 Mr Spencer’s solicitors sent the applicant’s solicitors an amended estate account.26 It was not filed. [98] This subsequent account is not irrelevant but it is the content of the account that was filed on 5 August 2014, in purported compliance with the third order, which needs to be considered in determining liability. The notion of a continuing contempt was touched upon in argument however the order had a finite date for compliance and liability rests upon what was done by then in purported compliance with the order. Subsequent events may inform fact finding as to whether the account when filed was contemptuous and may also inform penalty in the sense of demonstrating whether steps were taken to remedy the non-compliance. Breach (a) [99] Breach (a) of the third order is alleged to be: 25 Affidavit of Esetia Jane Cox ex p84. 26 Affidavit of Esetia Jane Cox ex p160. -- 23 of 31 -- 24 “Failing to detail the dealings with the sum of $25,000 expended by the respondent after 13 December 2012.” [100] As discussed above at [37] the amended estate account of 3 November disclosed that some of Mr Spencer’s personal expenditure of the deceased’s money included a cash component of $25,000 spent by him post 13 December 2012. This was not disclosed in the estate account filed 5 August 2014. Indeed that account only alluded to personal expenditure up to 13 December 2012. [101] The wording of the alleged breach is susceptible to meaning that Mr Spencer ought have given detail of the individual cash expenditures of the total of $25,000. It will be recalled that amount was in one of Mr Spencer’s own bank accounts and dissipated from there. I am not prepared to conclude that for the purposes of the account it was necessary for Mr Spencer to detail the individual incidents of cash expenditure by him of the total $25,000. It was however plainly necessary for him to at least disclose the fact, as he was to later admit, that he did deal with $25,000 of estate property by spending it after 13 December 2012. [102] The failure to do so was a breach of the third order. Whether or not it warrants a contempt finding is discussed below. Breach (b) [103] Breach (b) of the third order is alleged to be: “Falsely particularising the dealing with the sum of $8,050.36 on 12 February 2013 as: (i) “Payout by QTMB transfer to Mr Spencer of insurance policy re personal loan of the deceased”; and (ii) “This was an insurance payout which covered a personal loan taken out by the deceased that appears to have been paid with the mortgage”.” [104] On 12 July 2012 $20,317.81, being $20,000 plus interest, was transferred from the deceased’s account xx9990 to another QTMB account xx3038 in the deceased’s name.27 That same day $11,834.81 was drawn from the account as a corporate cheque payable 27 Affidavit of Esetia Jane Cox ex pp97, 121. -- 24 of 31 -- 25 to the funeral business that tended the deceased’s funeral. After some minor bank debits and credits this left a balance of $8,050.36 which, rounded with interest to $8,060.36, was transferred on 12 February 2013 to Mr Spencer’s QTMB current account number xx4777. 28 Mr Spencer deposed he did not cause the transfer to occur.29 [105] The allegation in breach (b) cites particulars given in the amended estate account of 3 November and in the covering letter annexing it. Those particulars incorrectly represent that the $8,050.36 was paid in connection with an insurance policy on a loan. In fact an insurance claim in respect of the deceased’s personal loan account was paid by a cheque for $6,602.72 dated 4 February 201230 which was deposited to the deceased’s QTMB loan account xx1403 on 8 February 2013, effectively paying off the loan account.31 If the error in the particulars inserted in the amended account of 3 November 2014 was deliberate then it would have the potential to inform punishment but it is not immediately relevant to liability. [106] Of more immediate relevance is the content of the account filed 5 August 2014 in purported compliance with the third order, particularly whether it contained any reference at all to the dealing with the sum of $8,050.36. That dealing with estate property should have been but was not mentioned in that account. Mr Spencer asserted he was ignorant of the monetary transfer however as discussed above at [45-46] his account only had $20 in it prior to the transfer and during 2013 he operated the account in such a way as to compel the conclusion he had become aware of the transfer. I infer he well knew of it by the time of the preparation of the account filed 5 August 2015. [107] The failure to mention such a dealing with the property of the deceased was a breach of the third order. Whether or not it warrants a contempt finding is discussed below. Breach (c) [108] Breach (c) of the third order is alleged to be: 28 Affidavit of Esetia Jane Cox ex pp104, Second Affidavit of Esetia Jane Cox ex p129. 29 Affidavit of Kent Richard Spencer [16]. 30 Affidavit of Esetia Jane Cox ex p107. 31 Affidavit of Esetia Jane Cox ex p104. -- 25 of 31 -- 26 “Failed to provide clear and succinct particulars of the transactions summarised as “property and rent expenses” in the sum of $21,678.18.” [109] The estate account filed 5 August 2015 lists distributions of estate assets to Mr Spencer as including a distribution to him of $21,008.45 on “various dates up to 13 December 2012” for “property and rent expenses”. [110] The absence of detail about the various dates on which such distributions occurred, what expenses were paid and in what amounts is a surprisingly elementary non- compliance with r 648 for a party who was legally represented. [111] The omission was a breach of the third order. Whether or not it warrants a contempt finding is discussed below. Contempt of second and third orders? [112] I have found Mr Spencer breached orders two and three by: (i) omitting any accounting for the sum of $102,167.73 of estate property (order two, breach (e)); (ii) omitting bank transactions about and dealings with rental income (order two, breach (f)); (iii) omitting bank transactions about and dealings with interest payments on term deposits (order two, breach (g)); (iv) omitting his dealing with $25,000 of estate property (order three, breach (a)); (v) omitting his dealing with $8,050.36 of estate property (order three, breach (b)); (vi) omitting details of distributions of $21,008.45 for property and rent expenses (order three, breach (c)). -- 26 of 31 -- 27 [113] These breaches have the potential to ground a finding of contempt but were they wilful? A determination of that question is complicated by the reality that all of these breaches occurred in respect of estate accounts prepared and filed by legal representatives. [114] I accept of course that an estate account generated by a legal practitioner is necessarily confined by the quality and accuracy of information provided by the client. Despite the waiver of privilege32 there was little relevant cross-examination or re-examination by either party about the dealings between solicitor and client in preparing the accounts. Such tentativeness is understandable but the upshot is that there is little direct evidence about whether the various breaches were the product of a stonewalling or obfuscating client or a solicitor who did not seek out detail that a lay client may not have realised was necessary. [115] The nature of omissions (i) and (vi) above is so obvious and should have been so obvious to a solicitor acting for Mr Spencer that I am not satisfied beyond a reasonable doubt that the breaches involved conduct which was not accidental or unintentional. That is not to suggest any want of professional skill on the part of the relevant solicitor and merely reflects the quality of the known evidence in a setting where proof beyond reasonable doubt is required.33 [116] On the other hand each of omissions (ii), (iii), (iv) and (v) above relate to transactions or dealings which I am satisfied Mr Spencer must have known of by the time of the preparation of the relevant estate account. Further they are transactions that are so obviously relevant to accounting for the estate that Mr Spencer must have realised he should provide the information. He did not bring the information to the attention of his solicitor in any comprehensible way.34 I find those omissions were wilful, not casual, accidental or unintentional. [117] I am fortified in reaching that conclusion by the fact that Mr Spencer had an obvious motive not to provide the omitted information for in each instance its provision would have provoked complaint that he had improperly dealt with estate property when he was the subject of an order not to. 32 T 1-9 L 26. 33 The respondent’s current solicitors were not his solicitors at the time of the breaches. 34 See, for example, his own equivocation at T1-41 L45. -- 27 of 31 -- 28 [118] It follows, subject to a consideration of the consequences of the absence of the penal endorsement, I would find Mr Spencer in contempt of orders two and three by reason of the wilful omissions listed at (ii), (iii), (iv) and (v) above. [119] As earlier discussed the critical question to now address is whether I am satisfied beyond reasonable doubt that Mr Spencer has not been disadvantaged by the non- compliance with the penal endorsement requirement of r 665(3). [120] Mr Spencer was legally represented. He well knew the orders had been made. As an adult of considerable life experience it may readily be inferred Mr Spencer knew he must obey the orders of the court and there may be some form of adverse consequence for him if he did not. Indeed he acknowledged in cross-examination that he knew a breach of the orders would be a very serious matter.35 More doubtful is whether he appreciated in the absence of the penal endorsement that the adverse consequence may involve punishment for contempt of court if he did not comply with the orders. [121] It is relevant that he did at least file accounts in response to each order. He likely regarded the thrust of each of the orders was that he file an account by the appointed date and he did purport to do so. [122] There is no evidence he was advised that he may be punished for contempt at all, let alone if the accounts did not comply with the content requirements of r 648. It is certainly not an inevitable inference that his lawyers would have so advised him. [123] That is particularly so given that the rules provide for a more specific, less extreme remedy where an interested party is not satisfied with the content of an estate account. That remedy is to file a notice of objection and seek the court’s direction for an assessment of the estate account pursuant to r 649. That remedy may not have been perceived as having particular utility by the applicant in this case however its existence makes it less rather than more likely that Mr Spencer’s lawyers would have conveyed a warning about the prospect of being punished for contempt for filing an estate account which was not adequately detailed. 35 T 1-6 L25. -- 28 of 31 -- 29 [124] The improbability of Mr Spencer being aware of the prospect of punishment for contempt for non-compliance is well illustrated by events subsequent to the filing of the estate account on 5 August 2014. By a r 444 letter36 dated 27 October 2014 the applicant’s solicitor wrote to the solicitors acting for Mr Spencer complaining of various ways that the account allegedly did not comply with r 648 and the third order. It noted the order’s absence of the r 665(3) penal endorsement and said: “We put the respondent on notice that if he continues to not comply with the [first, second and third] orders …the applicant intends to bring an application to have the respondent punished for contempt,…and if necessary, an application to declare the orders effectual for the purposes of the applications for contempt pursuant to r 371(2) UCPR.” [125] In correspondence of 30 October 2014 Mr Spencer’s solicitors responded that there was no order in the terms of r 665(3), nor had they consented to one, nor had it been discussed. This point has some force. It will be recalled the orders were orders made with the consent of Mr Spencer’s solicitors. Mr Spencer did not consent to the making of an order containing the penal endorsement, nor had the prospect of such an endorsement been discussed in the procuring of Mr Spencer’s consent to the orders. In effect the applicant now pursues Mr Spencer for contempt of orders he consented to but to succeed in doing so seeks to dispense with the requirement that those orders should have included the penal endorsement. [126] The likelihood is that had the penal endorsement been incorporated in the orders there would have been a heightened sense of awareness on the part of Mr Spencer’s solicitors which would in turn have been conveyed to Mr Spencer about the need for particular care and rigour in procuring the relevant records and formulating a complete and accurate account. It is apparent there could have been greater care and rigour than in fact did occur. [127] A further relevant consideration is that against a background where order two was not complied with the applicant did not pursue Mr Spencer for contempt. Rather she eventually procured another consent order of a similar kind. She was of course entitled 36 Affidavit of Esetia Jane Cox ex p113. -- 29 of 31 -- 30 to take that course but it was not a course which would prompt Mr Spencer into realising he could be punished for contempt of such orders. [128] Finally it is readily apparent from the evidence that Mr Spencer was not at his best for a lengthy period following the deceased’s death. He engaged in addictive behaviours, dissipating funds in so doing. The challenge to his grant of letters of administration and to his status as the deceased’s de facto would have introduced new stress upon his clarity of thinking.37 My findings as to his omissions 2, 3, 4 and 5 above obviously involves a rejection of the notion that his thinking was so cluttered or careless that the omissions were casual, accidental or unintentional. However in light of the stressors upon him it may very well have been that the force of a specific warning about the risk of punishment for contempt would have brought more focus to his thinking and attitude about compliance with the orders. If he had the benefit of such a warning it may well have made the difference between him stupidly continuing to fudge the details about his dealings with the estate and him instead being jolted into full candour and compliance. [129] Having regard to all of these considerations I am not satisfied that Mr Spencer has not been disadvantaged by the non-compliance with r 665(3). Accordingly I will dismiss the application for an order under r 371(2) declaring the second and third orders effectual despite the absence of the r 665(3) penal endorsement and will dismiss the application for orders that Mr Spencer is in contempt of orders two and three. Conclusion [130] The applicant has been successful to the extent that I have determined Mr Spencer is in contempt of order one. As earlier discussed I will hear the parties as to when the court should proceed to determine punishment. [131] The application also sought an order that certain sums of money be repaid and the net rent from unit three be quantified. This did not attract particular attention in the submissions of the parties. Whether there is utility in the pursuit of these orders can be considered when the parties are heard on punishment. 37 He summarised the impact of the personal stressors upon him at T1-97 L37-T1-98 L30. -- 30 of 31 -- 31 [132] Given the proceeding is incomplete I will reserve costs. Orders [133] My orders are: 1. The respondent has committed a contempt of the order of North J made on 13 December 2012. 2. I will hear the parties as to when the court should proceed to determine punishment for the contempt. 3. Application for a declaration under r 371(2) and orders the respondent is in contempt of the orders of 31 January 2013 and 22 July 2014 dismissed. 4. Costs reserved. -- 31 of 31 --