Contempt of Court brings Fine

30-November-2010 Fraud and Insolvency By Mark Streeter

Mark Bouris raises Contempt of Court case against former directors

The Situation – Ignoring Interim Freezing Order

In June 2009, Mr Mark Bouris became the chairman of TZ Ltd. Mr Bouris is well known as the star of The Apprentice reality TV show and as founder of Wizard Home Loans.
TZ Ltd commenced action to recover monies from former directors of the company.  One of the proceedings commenced was against an entity called ZMS Investments Pty Ltd (‘ZMS’).  On 16 September 2009 the Supreme Court of New South Wales made interim freezing orders (also called Mareva orders) under Uniform Civil Procedure Rule (UCPR) 5.11.  These orders restrained ZMS, by its directors, officers or agents, employees or others acting on its behalf, from:

“Selling, charging, mortgaging or otherwise dealing with or disposing of or causing or permitting to be sold, charged, mortgaged or otherwise dealt with or disposed of, all or any of its assets whether located within Australia or outside of Australia.”

Assets were defined in the orders to include a number of specifically identified properties.  It was alleged that after the making of the freezing orders, Mr Andrew John Sigalla (‘Sigalla’) caused ZMS to enter into a contract of sale for one of the properties that were subject of the Freezing Orders of September 2009.  The properties were listed for auction on 3 December 2009 and one of the properties was exchanged on 10 November 2009.  By Notice of Motion under Part 5 of the Supreme Court rules an application was made by TZ Ltd who also filed a Statement of Charge dated 13 November 2009, seeking orders that ZMS and Sigalla be found guilty of contempt for failing to comply with the orders of the court of 16 September 2009 and that they be convicted and made liable to such punishment as the court considers appropriate.

The Court Decision

Justice Austin, as Corporations Judge, heard the application in a hearing on 16 December 2009 and handed down a 12 page judgment on 23 December 2009.  His Honour found the contempt proved and imposed a $5,000 fine by way of penalty on each of ZMS and Sigalla and that ZMS and Sigalla pay TZ Ltd’s costs on an indemnity basis jointly and severally.

Comment from Mark Streeter

Compliance with court orders is critical for the continued proper administration of justice in New South Wales and public confidence in the judicial system. This case is a helpful reminder of the sharp edge of the judicial system and the application of force, in this case through $5,000 fines, for failing to comply with orders made by the Court.

The court extracted a helpful summary of principles applicable in an application for contempt.  In short these principles are as follows:
(a) The order alleged to be breached must be clear and unambiguous.
(b) The proper construction of an order is not a matter of fact but a question of law.
(c) It is not necessary for an applicant to approve an alleged contemnor intended to disobey the order.
(d) Deliberate conduct which is in breach of the order will constitute wilful disobedience of the order and therefore civil contempt unless the conduct be casual, accidental, or unintentional.
(e) The facts in issue in a contempt charge must be proved beyond reasonable doubt.

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Written by Mark Streeter

Mark Streeter

The Director of Streeterlaw, Mark has been practicing Law since 1994. He has attained his Masters of Law in 1999 and in 2006 was awarded his Specialist Accreditation in Commercial Litigation. Mark is a member of ARITA, a graduate of the AICD and a member of AICM. A member of STEP, Mark enjoys working in the area of Wills and Estates. In 2020 Mark is the Chair of STEP NSW.

Call us on 02 8197 0105 to book an appointment with Mark Streeter!

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