Emmett v Emmett [2010] SBHC 76; HCSI-CC 46 of 2008 (2 November 2010)

IN THE HIGH COURT OF SOLOMON ISLANDS

Civil Jurisdiction

BETWEEN:

Anita EMMETT
(Applicant)

AND:

Ronald EMMETT
(1st Respondent)

AND:

General Manager
Emmett Logging (SI) Ltd
(2nd Respondent)

AND:

General Manager
Emco Pacific (SI) Ltd
(3rd Respondent)

AND:

Patrick LAVERY
(4th Respondent)

AND:

Mike HAMMOND
(5th Respondent)

Date of Hearing: 28 June 2010, 5 July 2010, 23 and 24 August 2010
Date of Judgment: 2 November 2010

Tagini P for the Applicant
Titiulu B for the 1st Respondent
P Lavery in person

JUDGMENT

Goldsbrough J:

1. An application alleging contempt was filed by Anita Emmett (hereinafter referred to as the Applicant) on 14 December 2009 against five respondents, one of them her former husband, and the fourth respondent being Patrick Lavery, the subject of this judgment. I will refer to Patrick Lavery as the respondent in this judgment even though he is only one of many within the whole contempt application.
   
2. This case began within divorce proceedings between the applicant and her now former husband. At the commencement of and until sometime this year the respondent has been the legal representative of Mr. Emmett.
   
3. In the course of the divorce proceedings an application was made in respect of ownership of various assets. That matter came before another judge in 2009 and orders were made preserving the status quo pending determination of ownership and whether some or all or none of the property should be regarded as matrimonial assets liable to distribution with the divorce settlement. One such order was made on 19 June 2009 concerning the MV Buccaneer. It was made on an ex parte basis before the judge who earlier that day had presided over a hearing between the two marriage partners. In that hearing the judge had heard submissions on various matters and had reserved judgment. That reserved judgment was delivered on 13 July 2009.
   
4. The judgment of 13 July 2009 did not determine whether or not the MV Buccaneer should form part of the matrimonial assets, but merely determined that matrimonial assets distribution could take place within this jurisdiction and under what legislation. It left the question of what assets formed part of the matrimonial property to a later date. Before the judge at this hearing was an application to confirm his ex parte order of 19 June 2009 on an inter partes basis but this, apparently, was not pursued at that hearing. Although the fact is disputed with this application, it is submitted that the judge made it clear following his judgment that the ex parte order remained in force pending the further necessary determination as to ownership. I will deal with the factual dispute later in this judgment.
   
5. The order was expressed in the alternative. The MV Buccaneer was not to be sold or if it had been sold or was sold then the proceeds of sale were to be held in trust pending a determination as to whether it formed part of the matrimonial assets. Since the vessel had been sold earlier than the order was made, the latter provisions were effective, and yet none of the proceeds of sale were deposited by Mr. Emmett into the trust account to be set up by lawyers for the parties. That account, at least by the time this application was filed had not been established.
   
6. That failure led to Mr. Emmett being held in contempt and sentenced to six weeks imprisonment, which sentence was upheld on appeal. It is the same failure which brings the respondent into this court for contempt.
   
7. It is correct to submit that the lawyer for the applicant did not seek to make submissions on his inter partes application to extend the ex parte order at the hearing of 13 July 2009. The applicant submits that this was not necessary as the judge clearly intimated from the bench that the order was to continue. This is in dispute between the applicant and the respondent in this application although the same appears not to have been an issue as regards Mr. Emmett's contempt application.
   
8. To determine the dispute evidence was heard from the two lawyers who then acted, the respondent himself and M Tagini. Both filed sworn statements and both answered questions in cross examination. Earlier in this application the respondent had been content to submit that his failure to comply may have been the result of a misunderstanding of the effect of the judges' remarks. It was as a result of that submission that the applicant filed the evidence of M Tagini which the respondent sought to cross examine.
   
9. The evidence from M Tagini is that the judge made it clear at the hearing that the restraining order remained in force after he delivered his decision on 13 July 2009. His recollection was that after an intervention by the respondent suggesting that his client was entitled to dispose of his share of the proceeds of sale. The judge, M Tagini answered, made his position very clear before the court was adjourned. He continued his evidence noting that no application had subsequently been made to discharge of vary the order, and maintained that it was still in force.
   
10. In his evidence the respondent asserts that after the decision of 13 July 2009 was delivered there was no 'substantive argument or discussion'. He further asserts that if M Tagini had raised the issue of his inter partes application his application would have met with opposition. He finally asserts that the ex parte order was not continued after this hearing. He suggests that the evidence of M Tagini is untrue.
    
11. In support of his evidence, the respondent points to the lack of any note made by the judge of the hearing of the continuation of the order, and that no further order was taken out by counsel for the applicant.
    
12. In cross examination M Tagini was not moved from his statement. He referred to subsequent correspondence written to the respondent prior to this application being filed and the opportunity that correspondence offered for the issue to be resolved. He noted that the continuation of the order was not challenged by Mr. Emmett when he was confronted with the same contempt application. It is apparent from the record, and the respondent makes the same point, that Mr. Emmett did not challenge the continued existence of the order when he was tried for contempt.
    
13. There is no scope left here for a finding that there was any misunderstanding. Here are two qualified legal practitioners, one of whom is calling the other a liar (see paragraph 2 of the respondents' sworn statement).
    
14. I find as a fact that the exchange between the respondent and the presiding judge over what should happen next did take place and that the judge ended the exchange by clarifying that his ex parte order would remain in force until a determination was made as to who owned what. Although at first glance it appears that, since declarations sought were not granted, the applicant lost before the judge his final remarks 'until satisfied as to the individual proprietary rights of the parties'. He thus did not rule out the possibility that the vessel would be held to be a matrimonial asset. In those circumstances the continuation of the order until a determination would logically follow. This compares unfavourably with the evidence of the respondent that 'it would have been completely illogical'.
    
15. When the MV Buccaneer was sold, the respondent was acting for the vendor company Emco Pacific (Solomon Islands) Limited. He received a cheque payable to him for 654,686.09 Solomon dollars. The balance of SB$399,500 was to be paid at a later date. Quite when that money will be paid over, if it has not been paid already, seems to be in doubt. Although Mr. Emmett and his son control this company, neither of them were signatories to the sale agreement, as Mr. Emmett was sick and in Australia having received medical attention. His son was with him.
    
16. There is evidence, not disputed, that from the 654,686.09 dollars the respondent took 100,000 in settlement of various unpaid bills as between him and the company client. These were not charges for conducting the sale so could not legitimately be deducted from the sale proceeds as an expense of sale. Some money, quite how much it seems impossible to determine (although the respondent says that it was 227,363.04), was paid by the company to Mr. Emmett and the balance, belatedly, has now been paid into the joint trust account in accordance with the order of the judge. That did not happen before either Mr. Emmett was jailed or prior to the hearing of his appeal.
    
17. There is, then, evidence that the respondent controlled the proceeds of sale and rather than comply with the order of the court, he distributed the money in accordance with instructions from the client company. Yet the client company was controlled by Mr. Emmett. The instruction from the 'company' to give Mr. Emmett some money came from Mr. Emmett. Whilst there is clearly a distinct legal entity Emco Pacific (SI) Ltd., it is just as clear that this entity was under the control of only Mr. Emmett and his son William.
    
18. Evidence of this control came both from the respondent himself and his former client, who complains that in spite of request, the respondent failed to account to him for the balance of the funds. He further complains that the respondent did not advise him of the need to deposit the proceeds into a joint trust account.
    
19. In his defence the respondent submits that when he disbursed the proceeds of sale he acted upon instructions of his client Emco Pacific (SI) Ltd. and not on the instructions of Mr. Emmett. This must be viewed as an alternate defence given that in the first instance the respondent asserts that there was no order in force to comply with.
    
20. Yet all instructions from Emco Pacific came form or on the authority of Mr. Emmett. The application before the court was to consider whether the vessel should be regarded as a matrimonial asset rather than belonging to Mr. Emmett alone. To assert that if there was an order in force it did not catch these proceeds is not an argument that can be sustained.
    
21. Were there any doubt, and perhaps it is because there was no doubt that it never happened, the sensible course would have been to take the whole matter back before the presiding judge. This was suggested in their letter to the respondent when Global Lawyers wrote to him prior to institution this application. That offer was not taken up. The judge has since left this jurisdiction.
    
22. Contempt proceedings although civil may result in the imposition of a penalty or penalties. For that reason it is generally accepted that the standard of proof applied should be higher that the balance of probabilities. I have applied that higher standard and considered whether I am satisfied beyond reasonable doubt that this contempt is indeed made out.
    
23. I find that the respondent knew when he left court on 13 July 2009 that the judge had extended the relief previously ordered. I find that the respondent knowingly distributed the proceeds of the sale of the MV Buccaneer otherwise than in accordance with that order. I find that the respondent was in contempt of that court order as at the date this application was filed. To that extent this application is successful.
    
24. After that date the order was still not complied with, nor did the respondent attend a hearing of which he had been given notice when Mr. Emmett was also charged with contempt. This and the still outstanding money gave the Court of Appeal cause for concern when it heard Mr. Emmett's appeal. That, in my view does not go to this contempt as it all took place well after this application had been filed but I will refer to it for another reason.
    
25. In determining what the appropriate sentence for this contempt should be the starting point is six weeks imprisonment. That is the maximum prescribed sentence under the present Civil Procedure Rules. It is not clear what authority rules of procedure have to dictate penalties but that is another matter. The individual who did not see that the proceeds of sale were paid into trust as ordered was sentenced to six weeks imprisonment. He did what he did, according to his evidence, because his lawyer told him so. What possible reason could there be to differentiate, in terms of sentence, between the client and the lawyer? It could easily be argued that the client should escape liability if all that he or she did was to follow advice from a qualified legal practitioner.
    
26. When he was sentenced Mr. Emmett had not yet paid into trust the balance. At the time of this application for contempt, by 14 December 2009, which is, in my view, the operative time, a lot of that which has since happened had not then taken place. I will sentence this respondent for that which took place before the application was lodged, not that which took place after. That which took place after should be considered by those responsible for the discipline of legal practitioners, not this court. Should there be a further application for contempt that may change, but presently there is no such application.
    
27. Those responsible for the discipline of legal practitioners already have the reference made by Justice Chetwynd before them. I endorse that reference and in addition refer again the same conduct that is in evidence in this application before me. I am not aware of the decision of the Chief Justice with regards to that reference but I am confident that it resulted in a further reference to a disciplinary tribunal.
    
28. This, in my view, is relevant as far as sentencing is concerned. Unlike Mr. Emmett who goes on to work another day, this respondent should not, in my view, be further permitted to practice as a legal practitioner in this or any other jurisdiction without demonstrating that he has put this type of conduct behind him. Until that time his livelihood should be taken away from him. Whilst that is harsh, it is a fact that the public are entitled to be protected from him presently. The public, like the judiciary, need to be able to have confidence in the legal profession. That will not happen if conduct such as this goes unremarked.
    
29. This respondent knew what his duty was but neglected that duty in order to pay himself and retain that which he was not entitled to retain. In a different jurisdiction he would find himself in difficulty simply for not accounting to his client for the funds he retained. He would find himself suspended from practice whilst his firm was audited and his clients provided with alternate representation. Regrettably that is not the case here. Consideration should be given to introducing such powers of regulation. Practitioners awaiting hearings before a disciplinary panel in serious cases should be stopped from practicing in the interim, and steps should be possible to protect client funds in the meanwhile.
    
30. That is because whilst awaiting a disciplinary decision a court should be confident that no other member of the public is disadvantaged by similar conduct. Equally the disciplinary decision should not take long to make and to be made public. If it does, those responsible are failing in their own duty.
    
31. Given that he should lose his livelihood, and that since the first decision to imprison Mr. Emmett what remains of the proceeds has been paid into court, it seems that no purpose is served in committing this respondent to prison. There was incentive at the time of Mr. Emmett's imprisonment. There is no such incentive now. Yet the gravity of this offence must be marked. It must be marked for it strikes at the very heart of the administration of justice.
    
32. Having determined that imprisonment is not necessary in this instance, for the reasons set out above, the court concludes that a fine is indicated, a fine commensurate with the fees that the respondent took for himself from the proceeds of sale. The respondent will pay a fine of SBD$100,000.
    
33. I refer his conduct to the Chief Justice for consideration of a disciplinary reference. In particular in addition to the evidence in this application I draw his attention to the judgment of the Court of Appeal which followed the reference by Justice Chetwynd and the respondent's absence at his original contempt hearing, his failure to answer correspondence from fellow legal practitioners and his failure to assist his former client by accounting to him for the balance held in his client account and for not releasing that money which may have reduced his former client's sentence of imprisonment.
    
34. Any financial penalty must be matched to means in addition to reflecting the gravity of the offence. I am aware from the evidence in this case that the respondent received fees of $100,000 at least from this client alone. That, I believe, is sufficient evidence of means to suggest that the total imposed is with the means of the respondent. The applicant suggests each party pay their own costs. Because of that I make no order as to costs. Otherwise I would have considered ordering the respondent to pay the costs of this application.
    

Dated this 2nd day of November 2010

Goldsbrough J