Sunibrite Products (Aust) Pty Ltd v Jabuna Pty Ltd [1980] FCA 4; (1980) 47 FLR 73 (8 February 1980)

FEDERAL COURT OF AUSTRALIA

SUNIBRITE PRODUCTS (AUST.) PTY. LTD. v. JABUNA PTY. LTD. [1980] FCA 4; (1980) 47 FLR 73
Contempt

COURT

FEDERAL COURT OF AUSTRALIA
GENERAL DIVISION
Bowen C.J.(1)

CATCHWORDS

Contempt - Practice - Application for injunction - Undertakings by respondent - Service of undertakings on respondent - Commencement of contempt proceedings before service - Jurisdiction of court - Breach of undertaking - Standard of Proof - Penalty - Federal Court Rules, O. 1, r. 8; O. 7, r. 2 (1) (b); O. 40, rr. 6, 13 (3). On 20th December, 1979, Sunibrite (the applicant) commenced proceedings against Jabuna (the respondent) seeking certain injunctions. On 28th December, 1979, Jabuna gave certain undertakings without prejudice and without admissions. On 3rd January, 1980, certain undertakings were given to the court by Jabuna, the undertaking previously given was continued up to and including 30th January, 1980, and a further undertaking was given which in part provided: "(b) The respondent undertakes to the court not prior to 30th January, 1980, to permit any employee or agent . . . to sell any of the respondent's products complained of to any outlet . . . unless the respondent labels the products with a label or printed words clearly saying 'This is not a Sunibrite product'."

On 11th January, 1980, Sunibrite issued a motion for contempt against Jabuna alleging failure to comply with the undertakings in respect of sales to three shops. The motion, supporting affidavits and a document containing the undertakings were all served at Jabuna's registered office on 14th January, 1980.

Held: (1) The undertakings had been properly served under O.7, r.2(1) (b) of the Federal Court Rules by leaving them at the registered office of the respondent.

(2) Although notice of the undertakings with the required endorsement had been served on the respondent only after the commencement of the proceedings for contempt, and thus not in compliance with O.40, r.13(3) of the Federal Court Rules, this matter went to the discretion of the court and not to its jurisdiction.

(3) The contempt alleged was a civil contempt and, because of the possible penalties involved, proof of the utmost cogency was required.

Clifford v. Middleton, (1974) VR 737; Fullerton v. Gardiner, (1977) Supreme Court Procedure, Practice Decisions, p18, applied.

(4) (a) Undertaking (b) of 3rd January, 1980, required a label or printed words on the respondent's products which effectively conveyed to an ordinary purchaser the required message. (b) A breach of that undertaking had been established as it had been proved that a relevant sale had occurred in circumstances where inadequate steps to comply with the undertaking had been taken. (c) The other breaches had not been proved.

(5) The appropriate penalty in the circumstances was to order the respondent to pay the applicant's costs of the motion as between solicitor and client.

HEARING

SYDNEY 1980, January 18, 21, 22; February 8. 8:2:1980
NOTICE OF MOTION.

Notice of motion that the respondent be punished for contempt of court.

A. B. Shand Q.C. and P. Jacobson, for the applicant.

T. R. H. Cole Q.C. and R. Macready, for the respondent.
Cur. adv. vult.

DECISION

February 8.

BOWEN C.J. delivered the following written judgment.
This is a motion by Sunibrite Products (Aust.) Pty. Ltd. (hereafter called

"Sunibrite") pursuant to O.40 of the Federal Court Rules against Jabuna Pty. Ltd. (hereafter called "Jabuna") for an order that Jabuna be punished for contempt of court. (at p74)

2. On 20th December, 1979, Sunibrite commenced proceedings against Jabuna seeking certain injunctions. The matter came before the court on 28th December, 1979, when Jabuna, without prejudice and without admissions, gave certain undertakings which, it was noted, were to operate until 3rd January, 1980, or further order. These included an undertaking to the court in the following terms: "That it will place on the front of each display box hereafter sold over an area being the whole of the exposed area at the lower front of the display box a sticker covering the printing saying 'This is not a Sunibrite product' and that it will endeavour to place a similar sticker on boxes in retail outlets which may come to its attention in the course of deliveries of its products to those retail outlets." (at p74)

3. The matter was adjourned to 3rd January, 1980. When it was again before the court on that day, certain orders were made against Jabuna, one of which was to operate after 30th January, 1980, and certain undertakings by Jabuna were given to the court. It was noted, as undertaking (a), that the existing undertaking given on 28th December, 1979, was continued up to and included 30th January, 1980. It was further noted that Jabuna gave to the court an undertaking in the following terms: "(b) The respondent undertakes to the court not prior to 30th January, 1980, to permit any employee or agent of the respondent to sell any of the respondent's products complained of to any outlet or shop which was an existing customer of the applicant for its muesli slices or yoghurt pies as at December 1979 unless the respondent labels the products with a label or printed words clearly saying 'This is not a Sunibrite product'." (at p74)

4. The order of the court made on 3rd January, 1980, was duly entered on 9th January, 1980. On 11th January, 1980, the motion for contempt was issued by Sunibrite against Jabuna. The motion had subscribed to it a statement of charge as required by O. 40, r. 6 of the Federal Court Rules. This statement of charge alleged that Jabuna was guilty of contempt in that it had failed to comply with undertakings given by it on 28th December, 1979, and 3rd January, 1980, in the following respects, namely: "(a) it has not placed on the front of each display box sold after 28th December, 1979, a sticker saying 'This is not a Sunibrite product' covering the printing over the whole of the exposed area at the lower front of such box; and (b) it has permitted its employees or agents to sell certain of its products to outlets or shops which were existing customers of the applicant for its muesli slices or yoghurt pies as at December 1979 without having labelled the products so sold with a label or printed words clearly saying 'This is not a Sunibrite product'." (at p75)

5. Evidence was given that the notice of motion and three affidavits in support were served on Jabuna on 14th January, 1980, by being left at the registered office at 12.25 p.m. At the same time, a document containing the undertakings given on 28th December, 1979, and 3rd January, 1980, was also left at the registered office. Both undertakings had endorsed upon them a statement notifying Jabuna that in the event of its failing to observe the undertakings given by it to the court as set out, it might be liable to be punished for contempt of court by sequestration or fine or both. All documents were pushed under the door of the premises which were at that time not open for business. (at p75)

6. The evidence given upon the hearing of the motion, which was relied upon by Sunibrite to establish the alleged breaches, dealt mainly with goods of Jabuna sold to three shops which were customers of Sunibrite as at December 1979: 1. a delicatessen shop at 668 New South Head Road, Rose Bay, conducted by Mr. Henry Perl; 2. a delicatessen shop known as "Rose Bay Bread Shop" at 517 Old South Head Road, Rose Bay, conducted by Mr. Stan Hatkis; 3. a milk bar known as "The Orange Spot",214 Pitt Street, Sydney, conducted by Mr. Maher Garas. (at p75)

7. Before dealing with the evidence relating to Jabuna products sold to these shops, I should deal with a preliminary question which was raised and argued by counsel for Jabuna that there had been a failure by Sunibrite to comply with O. 40, r. 13 (3) of the Federal Court Rules and a submission that the motion should in consequence be dismissed. (at p75)

8. Order 40, r. 13 (3) provides: "13. (3) Where -
(a) a proceeding for contempt is commenced by a party for the failure of the accused person to observe an undertaking to the Court; and
(b) the undertaking was not given to the Court by the accused in person, or if the accused person was a corporation or organization, by a responsible officer of the corporation or organization in person,
a document containing the terms of the undertaking shall be personally served on the accused person endorsed with a statement that in the event of his failing to observe the undertaking, the person served may be liable to be punished for contempt of court by imprisonment or fine or both, or in the case of a corporation or organization, by sequestration or fine or both." (at p76)

9. It was submitted that the undertaking with the endorsed statement served on 14th January, 1980, had not been "personally served". Reference was made to O. 7, r. 2 (1) (b) which provides:

"2. (1) Personal service of a document is effected on -
(b) a corporation or organization - by leaving a copy of the document at the registered office of the corporation or organization or, if there is no registered office at the principal place of business or the principal office with some person apparently an officer of or in the service of the corporation or organization and apparently of or above the age of sixteen years." (at p76)

10. It was argued that the requirement of leaving the document with some person apparently an officer of or in the service of the corporation applied both to the case where there is a registered office and the case where there is no registered office. I do not accept this argument. I read O. 7, r. 2 (1) (b) as drawing a distinction between the case where there is a registered office, in which case it is sufficient to leave it at the registered office, and the case where there is no registered office when the procedure of delivering it to an individual as described in the latter part of par. 2 (1) (b) applies (cf. Companies Act, 1961 (N.S.W.), ss. 111 and 362). (Order 7, r. 2 (1) (b) has since been amended. See Government Gazette, 23rd April, 1980.) (at p76)

11. It was further argued by counsel for Jabuna that Sunibrite could rely only on breaches alleged to have occurred before the date of the motion, namely 11th January, 1980, and this contention was not contested by counsel for Sunibrite. However, counsel for Jabuna then argued that because there was no compliance with O. 40, r. 13 (3) prior to commencement of the proceedings on 11th January, 1980, the court had no jurisdiction to deal with the matter. Alternatively, it was argued that, as a matter of discretion, the court would not punish for a contempt alleged to have occurred in the absence of compliance with the rules. (at p76)

12. In my opinion, O. 40, r. 13 (3) does not go to jurisdiction. That this is so I conclude from its wording and from the fact that the court has power to dispense with compliance with its rules (O. 1, r. 8). However, I agree with the submission that the question of compliance with O. 40, r. 13 (3) and the question whether any alleged breach relied upon occurred before or after service of the documents required by O. 40, r. 13 (3) goes to discretion. The reason behind the rule is plain enough. Where the undertaking has not been given personally, particularly where it requires positive acts of compliance, it is most desirable that there should have been brought to the attention of the person sought to be punished for contempt, the precise terms of the undertaking and notice of the consequences of noncompliance (Ronson Products Ltd. v. Ronson Furniture Ltd. (1966) Ch 603 ; Trade Practices Commission v. C. G. Smith Pty. Ltd. [1978] FCA 2; (1978) 30 FLR 368 . Where this has not been done the court, depending on the circumstances of the particular case, will be reluctant to exercise its power to punish for contempt. I shall return to this question later. (at p77)

13. The next question which arises is whether any breach of either undertaking (a) or (b) has been established. Some argument took place as to the standard of proof required. Contempt constituted by breach of an order of the Court or of an undertaking given to the court is classed as a civil contempt and is contrasted with those contempts which take place in the face of the court or outside the court which are classed as criminal contempts (Consolidated Press Ltd. v. McRae [1955] HCA 11; (1955) 93 CLR 325 ; Australian Consolidated Press Ltd. v. Morgan [1965] HCA 21; (1965) 112 CLR 483 ; Borrie and Low, The Law of Contempt (1973), p. 314 et seq). In cases of criminal contempt, proof is required beyond reasonable doubt. In cases of civil contempt, because the consequences may involve fine or imprisonment or in the case of a corporation fine or sequestration, proof of the utmost cogency is also required (Clifford v. Middleton (1974) VR 737, at p 739 ; Fullerton v. Gardiner (1977) Supreme Court Procedure, Practice Decisions, p 18 ; Borrie and Low, supra, p. 319 et seq). (at p77)

14. I turn now to the evidence in relation to products sold by Jabuna to the three shops conducted by Mr. Perl, Mr. Hatkis and Mr. Garas. In the case of Mr. Perl, the affidavit evidence was that a display box containing muesli slices was sold by Jabuna to Mr. Perl on 8th January, 1980. The box and slices were tendered in evidence. The box did not have placed upon the front of it any sticker as required by the undertaking given on 28th December, 1979, which was continued on 3rd January, 1980. (at p77)

15. The muesli slices sold to Mr. Perl were wrapped in cellophane and had some printed letters upon the cellophane wrapping. In the case of one muesli slice, the full wording was legible. It read "This is not a Sunibrite product", which were the words required by undertaking (b). In the case of the other muesli slices, either the words had not all been clearly reproduced by the method of printing adopted or were to a degree obscured by folds in the paper or were difficult to read because of the nature of the wrapping and the nature of the printing. While some attempt had been made to comply with the undertaking, the result achieved was unsatisfactory, having regard to the requirement in the undertaking that Jabuna label its product with a label or printed words "clearly saying" "This is not a Sunibrite product". I feel bound to conclude that this was not "clearly said" on the products tendered in evidence. (at p77)

16. It remains to consider whether the display box and muesli slices in question were sold to Mr. Perl by Jabuna after the relevant undertakings were given. Clearly they were sold before the commencement of proceedings. Mr. Perl was examined in the witness-box. After hearing Mr. Perl I am unable in my mind to exclude the possibility that the display box was one sold to him before 28th December, 1979. Some evidence was tendered in relation to the sale of display boxes after 11th January, 1980, without the requisite words upon them. These instances occurring after commencement of the proceedings were not relied upon to establish breach. However, it was submitted that this evidence strengthened the conclusion I was asked to draw that the display box sold to Mr. Perl was sold without the requisite wording after the giving of undertaking (a). (at p78)

17. I do not consider that evidence sufficient to remove the doubt I have mentioned. Having regard to the standard of proof required in these matters, I conclude that breach of undertaking (a) in respect of the display box has not been made out. (at p78)

18. In the case of the muesli slices, because clearly an attempt has been made to place upon the foods the printed words, which I have mentioned, I am satisfied they were goods which were sold after the relevant undertaking (b) was given on 3rd January, 1980. I conclude, therefore, there was a breach of undertaking (b). (at p78)

19. As to the sale to Mr. Hatkis, the evidence was that a display box containing muesli slices had been sold to Mr. Hatkis not later than 8th January, 1980. There was no direct evidence as to how much earlier than that date it had been sold to him. However, one muesli slice from the box was tendered in evidence. It had on it in red print the letters "Sun". There was no evidence when this was placed on the product or whether a fuller message had at any time appeared upon it. I was asked by counsel for Sunibrite to infer that it was done after 3rd January, 1980, when the undertaking relating to placing these words on the product was given. I was asked by counsel for Jabuna to consider as a possible rational explanation that the full statement required by the undertaking had at first appeared upon the product but had been smudged or smeared by subsequent handling to a point where only the word "Sun" remained. I find that the proof of breach in this instance does not reach the standard required for this type of proceeding. I am not prepared to hold that there has been a breach in the case of this particular product. (at p78)

20. As to the sale of the product to Mr. Garas, there was tendered in evidence a Sunibrite display box containing Jabuna's muesli slices which were purchased from Mr. Garas by Mr. Glass, the managing director of Sunibrite on 8th January, 1980. Mr. Garas gave evidence by affidavit that these were sold to him by Jabuna during the preceding week, that is the week ending 4th January, 1980. It was not clear whether they were sold to him before or after 3rd January, 1980, when the relevant undertaking was given. This was a case where some of the products contained in the display box had red printing on them but it was illegible and one item had no printing on it at all and one item had on it black printing which was obscured by the folding but which, if carefully studied, could be read as "This is not a Sunibrite product". Mr. Garas was not examined in the witness-box. I regard this evidence as unsatisfactory in relation to the date of sale of the box and the illegible products. I am not prepared to hold that breach in respect of these goods has been established to the necessary standard of proof. (at p79)

21. In the result, there has been proved a breach of undertaking (b) in respect of the Jabuna muesli slices sold to Mr. Perl. The breach has occurred in circumstances where an attempt has been made to comply with undertaking (b) but the attempt has not been adequate. It appears to me that the whole sense of the undertaking given, when it required that Jabuna label its products with a label or printed words "clearly saying" "This is not a Sunibrite product", was that this should be evident to the ordinary purchaser of the goods. What is required for compliance with the undertaking is a label or printed words which effectively convey to a purchaser the required message. (at p79)

22. It becomes necessary, therefore, to deal with the question of discretion raised by the circumstance that O. 40, r. 13 (3) requires service of the undertaking and the notice of the consequences of noncompliance upon the person accused of contempt. At the time of the breach of undertaking (b) which is established by the evidence, this notice had not been given, although it was subsequently given. This is not one of the cases referred to in O. 40, r. 13 (3) where the undertaking has been given to the court by the accused in person or by a responsible officer of the corporation in person. On the other hand, it must be said that present in court when the undertaking was given was Mr. Dotch, a director of Jabuna and also Mr. Murray, another director of Jabuna, who was the solicitor for Jabuna instructing in the matter so that the company was aware of the undertaking given at the time and of the possible consequences of non-compliance. (at p79)

ORDER

Having regard to these facts and to the general nature of the breach which has been proved, it appears to me that it will be sufficient to mark the court's disapproval of the failure to comply in a proper way with the undertaking if Jabuna is ordered to pay Sunibrite's costs as between solicitor and client of this motion. The order of the court will be that Jabuna pay to Sunibrite its costs of the motion as between solicitor and client.

Order accordingly.
.T. J. GINNANE