Advanced Air Conditioning Pty Ltd v Katim Pty Ltd & Ors [2004] QDC 180

DISTRICT COURT OF QUEENSLAND CITATION: Advanced Air Conditioning Pty Ltd v Katim Pty Ltd & Ors [2004] QDC 180 PARTIES: ADVANCED AIR CONDITIONING PTY LTD (ACN 090 028 747) Applicant v CHARLES AQUILINA Respondent FILE NO/S: 4845/2001 DIVISION: Civil PROCEEDING: Application ORIGINATING COURT: District Court, Brisbane DELIVERED ON: 10 June 2004 DELIVERED AT: Brisbane HEARING DATE: 21 May 2004 JUDGE: Shanahan DCJ ORDER: Conditionally allow the applicant to file an amended application CATCHWORDS: CONTEMPT OF COURT – Where there was an allegation that the respondent had committed contempt by disobeying a court order DEFECTIVE APPLICATION – Where the proceedings in relation to the contempt were commenced by way of application – Where the application did not nominate the factual elements of the allegation or the correct statutory basis of the charge – Whether the application was a nullity – Whether the District Court had jurisdiction to cure the defect – Whether the applicant should be granted leave to amend the original application – Whether the proposed amendment was valid Cases cited: Cameron v Cole (1943) 63 CLR 571 Consolidated Press Ltd v McRae (1955) 93 CLR 325 -- 1 of 12 -- 2 Dow v Attorney General (1980) Qd R 58 Hafele (Aust) Pty Ltd v Maggbury Pty Ltd [2000] QCA 397 McGroarty v Clauson (1989) 167 CLR 251 R v Cook; ex parte Twigg (1980) 147 CLR 15 Stone v ACE-I.R.M. Insurance Broking Pty Ltd (2004) 1 Qd R 173 Statutes cited: District Court Act 1967 (Qld): s 129 Trade Practices Act 1974 (Cth) Uniform Civil Procedure Rules 1999 (Qld): rr 5, 371, 375, 377, 925, 926 COUNSEL: Mr M Amerena for the applicant Mr M Brady for the respondent SOLICITORS: McLaughlin Ivey for the applicant Walters & Co for the respondent [1] This matter arises out of an application which calls for the punishment of the respondent, Charles Aquilina, for an alleged contempt of court. [2] The application, filed on 24 March 2004, reads in the relevant part: “…the applicant is applying… for the following…: 1. That the [respondent] be punished for contempt of court pursuant to Rule 925 of the Uniform Civil Procedure Rules…” [3] This bare allegation of contempt is not then further particularised on the face of the application itself. [4] The matter came before me on 21 May 2004 for hearing. At that time the applicant sought leave to file an amended application which purported to particularise the alleged contempt pursuant to the requirements of r 926(1) Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”). That rule states: “926 Procedure under div 3 (1) A person applying for punishment of a contempt must file an application specifying the alleged contempt.” -- 2 of 12 -- 3 [5] The respondent objected to the amendment being filed on the basis that the original application amounted to a nullity and therefore could not be amended. The respondent also took issue with the proposed amendment because, in the respondent’s submission, it still failed to properly particularise the alleged contempt. [6] Although counsel for the respondent suggested that I should first hear evidence on the application before considering his objections as to its form, I took the view that this was not appropriate. Clearly it was desirable that the question of the application’s validity be determined before the substantive merits were considered. [7] It was on this basis that I received submissions on whether or not the amended application should be filed, leaving the merits of the substantive contempt allegation for another day. History of the matter [8] Before turning to the issue currently before me, it is necessary to give a brief outline of the history of the matter and the basis on which the contempt proceedings arise. [9] These proceedings essentially relate to the sale of an air conditioning business on 29 October 1999 as between various corporate entities. However, for the purposes of simplifying the matter, the transaction can be described as essentially the sale of a business from Charles Aquilina, as vendor, to Douglas Green, as purchaser. Charles Aquilina is the respondent to the contempt application and Douglas Green is a director of the applicant. [10] Clause 13 of the contract of sale is a “restraint of trade” clause. It relevantly states: “The Vendor shall not in any manner whatsoever either directly or indirectly be concerned or interested either alone or in partnership with or as manager servant or agent for any other person, company or corporation in the Business… or any other business of a similar nature within the prescribed area… for the prescribed period…” [11] The genesis of proceedings in the District Court is that on 5 October 2001 the applicant, as plaintiff, filed a Claim and Statement of Claim against Katim Pty Ltd, Charles Aquilina and his wife, Marlene Aquilina. The Claim was for various heads -- 3 of 12 -- 4 of damages said to arise out of contraventions of the Trade Practices Act 1974 (Cth), breach of contract and negligent misstatement. The Claim also requested that the defendants be ordered to give certain covenants and that they be restrained from conduct which would contravene cl 13 of the contract of sale. The basic tenant of the proceedings was that some or all of the defendants had recommenced trading in the air conditioning industry and were therefore in breach of their contractual obligations. [12] Simultaneously with filing the Claim and Statement of Claim, the plaintiff filed an application seeking, amongst other things, an interlocutory injunction to restrain the defendants from conducting any business in relation to air conditioning within a specified area and period of time. [13] On 24 October 2001, on the interlocutory application, His Honour Boulton DCJ ordered that: “[From] 9.00am on 26 October 2001 until 29 October 2004 or the trial of the action, whichever is the earlier, the Defendants be restrained from carrying on either directly or indirectly, or being concerned or interested, either alone or in partnership with, or as manager, servant or agent for any other person, company or corporation in the business of air-conditioning design, sales, installation and service or any other business of a similar nature within Queensland and Northern New South Wales, north of Ballina and west to Mungindi”. [14] The present application was filed on 24 March 2004. Various affidavits in support and opposition to the application have since then been filed, although it should be noted that a good deal of the material was not received, at least by the court, until the day prior to the hearing. Issue for determination [15] The primary issue before the court is whether the applicant should be allowed to file its proposed amended application. In order to make a determination in this regard it is necessary to consider: (a) whether the failure to specify the alleged contempt in the original application renders it a nullity, and -- 4 of 12 -- 5 (b) if it is not a nullity: whether the court should allow the amended application in its present form. Respondent’s arguments [16] In relation to the question of nullity, the respondent argued that the District Court, as an inferior Court of statutory jurisdiction, has no general jurisdiction, or even implied statutory jurisdiction, to deal with the disobedience of its orders (Dow v Attorney General (1980) Qd R 58 per W. B. Campbell J at 62). Rather, s 129 of the District Court Act 1967 (Qld) (“the Act”), which deals with contempt of court, creates a specific statutory offence. [17] Section 129, which is contained in Division 3 (Offences) of Part 11 (General Provisions) of the Act, reads relevantly: “129 Contempt (1) A person is in contempt of the District Court if the person – (a) without lawful excuse, fails to comply with an order of the court… (b) … (2) A District Court judge has the same power to punish for a contempt mentioned in subsection (1) as a Supreme Court judge would have if the contempt were a contempt of the Supreme Court. (3) …” [18] In the respondent’s submission, although a District Court judge has the same powers of a justice of the Supreme Court to punish in respect of contempt (s 129(2)), the power must be tempered against r 926(1) UCPR which requires an applicant to specify the alleged contempt. [19] The respondent submitted that because the “utmost strictness in procedure and proof is demanded” in contempt proceedings (Hafele (Aust) Pty Ltd v Maggbury Pty Ltd [2000] QCA 397 at [29]; Consolidated Press Ltd v McRae (1955) 93 CLR 325 per Dickson CJ, Kitto and Taylor JJ at 333; R v Cook; ex parte Twigg (1980) 147 CLR 15 per Gibbs J at 25), it was then a question of whether the court could cure the defect and allow the application to proceed. -- 5 of 12 -- 6 [20] In this respect, counsel for the respondent argued that, unlike a superior court, the District Court has more limited scope for invoking general remedial rules to cure a defect which causes an action to be outside of the court’s jurisdiction. As authority for that proposition, the respondent cited Stone v ACE-I.R.M. Insurance Broking Pty Ltd (2004) 1 Qd R 173 and Cameron v Cole (1943) 63 CLR 571. In short, the respondent’s argument was that if a mandatory requirement is not met, the action is a nullity and, unless there is a statutory discretion to cure it, the action should be dismissed for want of jurisdiction. [21] In relation to r 371(1) UCPR, which essentially states that a failure to comply with the rules does not render an application a nullity, the respondent replied in oral argument that the section is not applicable because the UCPR does not create jurisdiction in respect of contempt. Counsel for the respondent referred to the power to create the rules of court and submitted that the subject matter of the UCPR is limited to only those matters which are within the court’s jurisdiction. Therefore, r 371(1) is not relevant because the court is without jurisdiction as a result of r 926(1) not being satisfied. [22] The respondent then submitted in the alternative that, if the action was not a nullity, the applicant should not be given leave under r 377 UCPR to file the amended application. The respondent pointed to a number of perceived defects in the proposed amended application, namely that: (a) it fails to specify the correct statutory offence (i.e. s 129 of the Act) as required by McGroarty v Clauson (1989) 167 CLR 251, (b) it fails to specify sufficiently the factual matters as they relate to the orders said to be breached – i.e. whether the respondent has been directly or indirect involved, whether he was concerned or merely interested in the business, whether he has acted as a manager or a servant, (c) the proposed amended application was only provided to the respondent at a very late stage, indeed the day before the hearing, and -- 6 of 12 -- 7 (d) even with the amendments, the facts as disclosed in the amended application could not lead to proof beyond a reasonable doubt that the respondent had committed an offence. Applicant’s arguments [23] In relation to the issue of nullity, the applicant submitted that the respondent’s argument in relation to nullity was contrary to the clear terms of r 371(1) UCPR: “371 Effect of failure to comply with rules (1) A failure to comply with these rules is an irregularity and does not render a proceeding, a document, step taken or order made in a proceeding a nullity.” [24] On this basis, the applicant then argued that I had power to allow the applicant to amend its application under r 375(1) UCPR, which states: “375 Power to amend (1) At any stage of a proceeding, the court may allow or direct a party to amend a claim, anything written on a claim, a pleading, an application or a document in a proceeding in the way and on the conditions the court considers appropriate.” [25] I should say at this point that this rule needs be read together with r 377: “377 Amendment of originating process (1) An originating process may not be amended except – (a) if the amendment is a technical matter – with the leave of the registrar or the court; or (b) otherwise – with the leave of the court. (2) Subrule (1) does not apply to a pleading or particular included in an originating process.” [26] In relation to whether I should exercise my discretion to allow the amended application to be filed, the applicant submitted: (a) that to disallow the amendment would encourage a multiplicity of proceedings, which would be at odds with the intention and purpose of the UCPR, (b) the application does not seek to raise any additional matters of contempt which have not already been dealt with by the affidavit material, and -- 7 of 12 -- 8 (c) the respondent has not submitted that he would be prejudiced if leave was granted to file the amended application. [27] The applicant submitted that it was this last factor which was of “considerable significance”. [28] In relation to the respondent’s criticism of the proposed amendments, counsel for the applicant submitted that such criticism was unfounded because the proposed amendments “first of all sets out what the terms of the injunction are, and then it sets out the allegation”. The applicant further submitted that it was impossible for me at this stage to determine a likely outcome on the merits of the application and it would be improper for me to turn my mind to that consideration. Is the original application a nullity? [29] I think it is clear on the face of it that, notwithstanding that there may be defects in the original application, r 371(1) UCPR provides that the application is not a nullity. [30] While it is strictly true, as submitted by the respondent, that r 371(1) does not create the court’s jurisdiction in relation to contempt, the mandatory requirement of r 926(1) to specify the alleged contempt (which is itself a rule of court) cannot possibly usurp the courts jurisdiction pursuant s 129(2) District Court Act when rr 371(1) and 375 UCPR provide an answer to any purported defect. It should also be noted in this respect that the provisions of r 926(1) are not excluded from the operation of r 371(1), notwithstanding the seriousness of the contempt application carrying criminal sanctions. Nor is the grant of power under s 129 conditional upon r 926(1) being satisfied. [31] I therefore do not accept the respondent’s submission that any defects that might arise in this case cannot be cured. While there may be a conceptual distinction between the general powers of superior and inferior courts for the purposes of remedying fundamental defects, the power of amendment granted by r 375 enables the court in this instance to remedy the defect if that course is deemed to be appropriate. -- 8 of 12 -- 9 [32] While it is the case that this court has power under r 371(2) to set aside all or part of the proceeding or make another order because of a failure to comply with the rules, it would seem that this would not be appropriate. The respondent has not asked that the court take this approach – its argument all along has been that the proceeding is a nullity – nor has it sought to demonstrate any prejudice that might arise if this course was not adopted. In any event, to do so, in my view, would only unduly delay an inevitable hearing of the contempt allegation. [33] However, I accept the respondent’s alternative submission that the original application is defective. Clearly the respondent is entitled to know the specific charge against him and this has simply not occurred in this case. Because of the grave seriousness of contempt proceedings, courts in these cases properly require that an accused person be given notice of the specific allegations which must be answered. It is akin to, in a traditional criminal matter, the presentation of a correctly worded indictment and the supply of particulars. [34] The reason courts are so particular about the form of a charge made against a person (whether it be a criminal charge contained in an indictment or in relation to contempt proceedings by way application) is that it is necessary for an accused person to have this information so that the allegation can be properly answered. A bare allegation of contempt does little to aid the respondent’s preparation. This is particularly so, in cases such as the present, where the alleged contempt is in relation to a complex order of the court and in circumstances where an alleged breach of that order might be constituted by a wide spectrum of conduct. [35] It is unacceptable that the only particulars in relation to a charge be provided by way of affidavit material. [36] Not only did the original application in this case fail to properly allege the correct statutory basis of the charge, it did not specify with the requisite particularity the conduct which the applicant alleges against the accused. For these reasons I would declare the original application filed in this matter as irregular within the meaning of r 371(1). -- 9 of 12 -- 10 [37] The question then becomes whether to grant the applicant leave to file the amended application. Should leave be granted to file an amended application? [38] It is my view that it is preferable for leave to be given to amend in cases such as this unless the amendment itself would not cure the irregularity, or if there would be some specific prejudice suffered by the respondent. To not do so, in my view, would hardly be in keeping with the principles set out in r 5 UCPR. [39] The proposed amendment relevantly reads: “To the second defendant: TAKE NOTICE that the applicant is applying to the Court for the following orders: 1. That the second defendant be punished for contempt of court pursuant to Rule 925(1)(a) of the Uniform Civil Procedure Rules in that; (a) on 18 October 2001, Boulton DCJ ordered that from 9.00am on 26 October 2001 until 9 October 2004 or until the trial of the action, whichever is the earlier, the Defendants be restrained from carrying on either directly or indirectly, or being concerned or interested, either alone or in partnership with, or as a manager, servant or agent for any other person, company or corporation, in the business of air-conditioning design, sales, installation and service or any other business of a similar nature within Queensland and Northern New South Wales, north of Ballina and west to Mungindi (“the injunction”); (b) between October 2003 and May 2004, the second defendant has been concerned or interested in the business of air-conditioning design, sales, installation and/or service in Queensland in breach of the terms of the injunction in that: (i) he is and has been from 12 November 1997, a director of Arrow Industries Aust Pty Ltd (“Arrow Industries”); (ii) Arrow Air Conditioning Pty Ltd (“Arrow Air Conditioning”) is and has at all times since October 2003 carried on business in air conditioning, design, sales, installation and service; (iii) the director of Arrow Air Conditioning has at all material times been the first defendant’s son, Timothy Aquilina; (iv) Arrow Air Conditioning and Arrow Industries have both operated from the same premises: (A) at Braun Street Sandgate from in or about April 2004; and (B) at 100 Hoskins Street, Sandgate from in or about October 2003 until in or about April 2004; -- 10 of 12 -- 11 (v) Arrow Air Conditioning and Arrow Industries have at all material times from October 2003 to May 2004 used the same office staff, telephone numbers and vehicles; (vi) The premises from which Arrow Industries and Arrow Air Conditioning: (A) operated at 100 Hoskins Street, Sandgate, was owned jointly by the first and second defendants; (B) operate at Braun Street, Sandgate is owned by Eagle Projects, Pty Ltd as trustee, a company controlled by the first defendant; (vii) on a date between November 2002 and June 2003, the first defendant purchased equipment associated with use in an air conditioning business, namely uninsulated flexible duct and plastic round grilles; (viii) in or about mid-April 2004, the first defendant asked Russell Green where he would be interested in preparing an electronic catalogue for DL Equipment, a company that deals, inter alia, in the sale of air conditioning equipment; 2. …” [40] From the outset it can be said that the proposed amendment is defective because it still refers to the r 925(1)(a) UCPR when it should instead refer to the section that creates the offence and confers power on the court to hear the charge, i.e. s 129 of the Act. However, while this is a significant defect, it does not convince me that the amendment should not be allowed. [41] I agree with the respondent that it is relevant to consider whether the proposed application discloses a valid charge. This can be done without considering the ultimate merits of the contempt application, and without evaluating the strengths of any affidavit material. The question that must be answered is: If the allegations set out in the amended application can be proved, is it possible that the respondent could be convicted of contempt? I am of the view that this question can be answered in the affirmative. While it will ultimately become a question of what evidence there is to support the allegation, if it can be proved that the respondent has conducted himself in the manner as described in the amended application, for the purpose of being concerned or interested in the business as alleged, it would be open for this court to convict the respondent. [42] Therefore, for these reasons I will allow the applicant to file the amended application conditional only that the reference to r 925(1)(a) UCPR be modified to read “s129(1)(a) District Court Act 1977 (Qld)”. -- 11 of 12 -- 12 [43] Bearing in mind the respondent’s concerns that the matter be dealt with as expeditiously as possible, it is appropriate that I make further directions as to the conduct of this matter. I intend to do this contemporaneously with the publication of these reasons. [44] As I indicated at the hearing of this matter, I will also hear the parties as to costs at that time. -- 12 of 12 --