Re Geoff Penney (Australia) Pty Ltd v Skyjack Computer & Office Supplies Pty Ltd; Toby Louis Carboni and Malcolm Francis Craig [1990] FCA 44 (23 February 1990)

FEDERAL COURT OF AUSTRALIA

Re: GEOFF PENNEY (AUSTRALIA) PTY LTD
And: SKYJACK COMPUTER & OFFICE SUPPLIES PTY LTD; TOBY LOUIS CARBONI
and MALCOLM FRANCIS CRAIG
No. WA G84 of 1987
FED No. 51
Contempt

COURT

IN THE FEDERAL COURT OF AUSTRALIA
WESTERN AUSTRALIA DISTRICT REGISTRY
GENERAL DIVISION
French J.(1)

CATCHWORDS

Contempt - injunction - corporation and directors bound - related corporation engaging in prohibited acts - contrary to instructions of new common directors - whether acting as agent for corporation under injunction - scope of injunction - purported compromise of proceedings - whether effective - public interest - whether Court bound to effect concluded compromise.

Trade Practices Act 1974 s.52

Federal Court of Australia Act 1976 s.31

Judiciary Act 1903 s.24

Flamingo Park Pty Ltd v Dolly Dolly Creation Pty Ltd [1985] FCA 123; (1985) 59 ALR 247

Seaward v Paterson (1897) 1 Ch 545

Sharp v Deputy Federal Commissioner of Taxation 89 ATC 4059

Australian Meat Industry Employees Union v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 66 ALR 577

Attorney General v Times Newspapers Ltd (1974) AC 273

Ronson Products Ltd v Ronson Furniture Ltd (1966) 1 Ch 603

Thorne Rural District Council v Bunting (No. 2) (1972) 3 All ER 1084

Bassel's Lunch Ltd v Kick (1937) 1 DLR 235

Beloit Can Ltee/Ltd v Valmet Oy (1986) 11 CPR (3d) 470

Island Glass Limited v O'Connor (1981) 40 Nfld and PEIR 361

Performed Line Products Co. v Payer Electric Fittings Co. (1965) 1 Ex C R 371

Northern Counties Securities Ltd v Jackson Steeple Ltd (1974) 2 All ER 625

Upholsterers International Union of North America v Hankin and Struck Furniture Ltd (1964) 49 WWR 33

HEARING

PERTH
23:2:1990

Counsel for the Applicant: Mr S. Owen-Conway

Solicitors for the Applicant: McPhee & Meyer

Counsel for the Respondents: Mr M. Odes

Solicitors for the Respondents: Parker & Parker

ORDER

The motion is dismissed.

The applicant is to pay the respondents' costs of the motion.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DECISION

REASONS FOR JUDGMENT ON MOTION TO PUNISH FOR CONTEMPT
Introduction
In February 1988 Skyjack Computer and Office Supplies Pty Ltd ("Skyjack") consented to an order of the Court in favour of Geoff Penney (Australia) Pty Ltd ("Penney") preventing Skyjack from selling a product known as the Superline 70 marker pen anywhere in Australia. In June 1989 the pens were offered for sale and at least three were sold in Adelaide by Boss Computer and Office Supplies Pty Ltd, a company closely related to Skyjack. Penney now moves for orders punishing Skyjack and its directors for contempt of Court and for further injunctive relief. The questions which arise in this case are; whether the sales by Boss amounted to or arise from breaches of the injunction or contempts otherwise committed by Skyjack and its directors, whether the fact that the sales were made without the authority and contrary to instructions given by directors of Boss makes any difference and whether in any event the parties have compromised the dispute arising out of the sales?
Facts Giving Rise to the Alleged Contempt

2. Geoff Penney (Australia) Pty Ltd formerly Geoff Penney (NSW) Pty Ltd, has been sole distributor of Artline marker pens in New South Wales, Queensland, South Australia and Tasmania since 1966 and for the whole of Australia since 1984. On 7 August 1987 it commenced an action for injunctive relief and damages against Skyjack Computer and Office Supplies Pty Ltd and its directors, Toby Carboni and Malcolm Craig. The proceedings arose out of the sale, by Skyjack, of a marker pen known as the Superline 70 which was deceptively similar to the Artline 70. The conduct of Skyjack in marketing the Superline was said to be in contravention of s.52 of the Trade Practices Act 1974 and to amount to passing off.

3. On 4 September 1987, after argument on Penney's claim for interlocutory injunctive relief the following order was made on the usual undertaking as to damages:

"The first respondent (Skyjack) is hereby
restrained by itself, its servants or agents from
12 noon on Monday 7 September 1987 until the
hearing and determination of the application or
further order, from selling, supplying or offering
for sale in Western Australia the Superline 70 pen
of the type exhibited to the affidavit of William
Hillman Berg sworn 21 August 1987 and marked WHB2."

On 3 February 1988 final orders were made by consent:

"1. The first respondent and the second
respondents are hereby perpetually restrained
by themselves, their servants or agents from
selling, supplying or offering for sale
anywhere within the Commonwealth of Australia
the Superline 70 pen of the type exhibited to
the affidavit of William Hollman Berg (sic)
dated the 21st day of August 1987 and marked
"WHB2", and are perpetually restrained from:-
(a) selling, supplying or offering for sale;
and
(b) aiding, abetting, counselling or
procuring the sale, supply or offering
for sale of the Superline 70 pen.
2. The first respondent and the firstnamed second
respondent pay the applicant forthwith the sum
of $3,000.00.
3. The first respondent and the firstnamed second
respondent pay the costs of the action to be
taxed if not agreed."

Following the interlocutory order in September 1987, Kede Peter Carboni, Skyjack's company secretary, instructed solicitors to brief counsel to advise on the effect of the order and in particular whether it would prevent sale of the Superline 70 pens by a related South Australian company, Boss Computer and Office Supplies Pty Ltd ("Boss"). On 12 November 1987, counsel advised that the order as it then stood only prohibited Skyjack from selling, supplying or offering the Superline 70 for sale in Western Australia. It did not prevent its sale in other States. However, if out-of-State sales were contemplated, the pens and the relevant representative of Skyjack should be outside Western Australia before any were made.

4. Skyjack was at all material times trading as trustee of the Skyjack Unit Trust. Boss traded in its own right. The relationship between Skyjack and Boss is defined by reference to their respective unitholders and shareholders, their directors, the range of products marketed and co-operative arrangements entered into between them. At 30 June 1989 the 11 holders of the 100 units in the Skyjack Unit Trust included Toby and Patricia Carboni with 84, Kede Carboni with 8 and Declan Ryan with 10. Kede Carboni and Declan Ryan also held 3.6% and 18.2% respectively of the issued shares in Boss. Cy Carboni, who had no units in the Skyjack Unit Trust held 18.2% of the shares in Boss. Five other persons, between them holding 9.3% of the units in the trust, also held 20.1% of the shares in Boss. And in June 1989 Kede and Cy Carboni and Declan Ryan were directors of both companies. Toby Carboni, a director of Skyjack since 1982, had also been a director of Boss from August 1987 until March 1988 when he resigned. Kede Carboni was company secretary for Skyjack from July 1987 and of Boss from March 1988 on. He was therefore at the material time secretary to both companies. He described the relationship between the two companies as "close" and "co-operative". There had been sales of stock from Boss to Skyjack previously when Boss had surpluses that Skyjack could dispose of in Western Australia. Those sales had been recorded. As appeared from his evidence in cross-examination Boss had given a charge in favour of Australian National Finance to secure moneys owing to that company by Toby Carboni's family company.

5. Kede Carboni concluded from counsel's advice of 12 November 1987 that Skyjack would not be in breach of the interlocutory injunction if it gave its stock of Superline 70 pens to Boss free of charge for sale through its retail outlets in South Australia. In that same month he arranged for all remaining supplies of the Superline 70 to be delivered to Boss. There was no agreement that Boss would do anything other than retain the proceeds of sale for its own benefit and those of its shareholders. The consignment of the pens was handled by Cy Carboni, but there was no record of it made in Skyjack's books nor any documented acknowledgement from Boss. Kede Carboni did not make any check of the precise number of pens consigned. He regarded the number as irrelevant.

6. After the consent order of 3 February 1988, Kede Carboni spoke to Derry Horgan and June Oakey who were respectively the warehouse manager and purchasing officer for Boss in Adelaide. He showed them both a copy of the Court's order and told them that the Superline pens could not be sold by Boss. He also discussed the matter with Declan Ryan, then his co-director in both Boss and Skyjack. The Superline pens were placed in the warehouse in such a position that, it was said, they would not, in the ordinary course, find their way on to the shelves of Boss' retail outlets. The fact is however, that on 2 June 1989 a Superline 70 pen was offered for sale and sold in retail premises operated by Boss at 12 Burbridge Road, Mile End in Adelaide. Another two were purchased on 5 June 1989 at a second outlet at Shop 1, Pirie Street Carpark, Pirie Street, Adelaide. Two boxes of 12 Superline 70 pens were on display in that shop next to a display of Artline 70 pens.

7. Derry Horgan gave evidence on affidavit, which was not contradicted, that Kede Carboni had instructed him in Februry 1988 not to sell any of the Superline 70's and that he was told to remove all such stock from the display shelves of the Boss retail outlets and from storage areas and distribution bins in the warehouse. He in turn told Nicholas Kay, then assistant warehouse manager, to remove all the stock in accordance with those instructions and pack it away. Kay, in his affidavit, said he did this and placed the pens in the warehouse "in such a position that they would not find their way into the retail outlets of Boss".

8. June Oakey who was the purchasing officer and stock co-ordinator for Boss, confirmed that she was told by Kede Carboni sometime in the first few months of 1988 that the company could no longer sell Superline 70 pens. She noted shortly after this that a number of Superline 70 pens had been sealed in boxes and placed on shelves in the warehouse again "in such a position that they would not, in the ordinary course, find their way to Boss' retail outlets." As purchasing officer and stock co-ordinator during the relevant period one of her duties was to determine what stocks to purchase when existing stock became depleted. Where there were two similar product lines in the warehouse and one was out of stock, she could authorise its replacement with the similar product. She said, however, that as a result of what she had been told about the Superline 70 pens, she at no stage authorised their stocking or sale in Boss retail outlets. Until June 1989 she was unaware that they had been displayed for sale. Horgan made enquiries to try to determine how they had come to be sold in Boss' retail outlets. He was told by Martin Foster, a warehouse foreman, that in April or May 1989 he had placed a number of the pens in a distribution bin. They had previously been located in a storage area adjacent to the bin. Foster had not commenced employment with Boss until May 1988 and had nothing to do with stock until October 1988 when he had been appointed as a storeman in the warehouse. Horgan was unable to say how it was that the pens came to be in a storage area above a distribution bin. He suggested that someone had inadvertently placed them there during the transfer of warehouse stock in September 1988.

9. I accept that the pens displayed at the two Boss retail outlets in June 1989 were displayed there as the result of the action of persons other than the directors, managers, or senior officers of the company.
Compromise Negotiations

10. On 9 June 1989 McPhee & Meyer, the solicitors for Penney, sent a letter to Toby and Kede Carboni complaining of the sale of the Superline 70 pens by Boss. The letter threatened the issue of proceedings to punish them and Skyjack for contempt and set out certain demands which were in substance as follows:

1. A written undertaking from Skyjack, Boss and
their directors and other officers that they
would not sell the Superline 70 pen anywhere
within the Commonwealth of Australia or aid,
abet, counsel or procure its sale or offering
for sale.
2. Delivery up to Penney or its nominated
representative of all Superline 70 pens held
in stock by Skyjack and Boss.
3. An account of profits made by either Skyjack
or Boss and access for Penney or its
representative to the books and records of
those companies to complete and verify such
an account.
4. An indemnity to Penney for the cost of making
the demand and preparing a motion for
punishment for contempt.

11. The letter went on to say that until such time as the undertakings demanded were received, contempt proceedings would be prepared and proceeded with against Skyjack and Toby Carboni. It was anticipated that the motion to commence the proceedings would be filed on 14 June.

12. On 14 June 1989 the same solicitors sent a copy of their letter to Parkers, the solicitors for the respondents. By a fax letter headed "Without Prejudice" and dated 15 June 1989, Parkers responded saying that they acted for both Skyjack and Boss and that:

"Our clients undertake to comply with the demands
made in the letter aforesaid, and accordingly
confirm your client's undertaking not to bring
contempt proceedings."

13. The reply from Penney's solicitors began by asserting that the letter of 15 June from Parkers was not sufficient to satisfy their client's demands because:

A. It was marked "Without Prejudice".
B. Parkers were only acting for the companies,
Skyjack and Boss, whereas the demands were for
undertakings from those companies, their
directors and public officers.

A deed to be executed under seal by the companies and their directors and secretaries was enclosed. The execution of the document by all parties concerned would, it was said, satisfy Penney's demands.

14. In their reply dated 23 June, Parkers said that they had assumed Penney's solicitors knew they acted on behalf of the companies and their directors. They confirmed that they acted for Boss, Skyjack, C.J. Carboni, T.L. Carboni, K.P. Carboni and D.C. Ryan and that their clients and all other officers of Skyjack and Boss undertook to comply with the demands made in the letter of 9 June. By a further letter dated 27 June, Penney's solicitors reiterated the two points previously made about the heading of the letter of 15 June from Parkers and the fact that the undertakings had not been given on behalf of all the natural persons involved. The letter then concluded:

"We acknowledge your advice that all relevant
parties are represented by you and that on behalf
of those parties you have given their undertaking
to comply with our client's demands. The demands
your clients have undertaken to comply with
included a demand that your clients provide certain
undertakings in writing. To comply with the
undertaking given by your clients they should
execute the Deed of Undertaking sent to you by us."

The Deed however included undertakings that went beyond those set out in the letter of 9 June requiring in particular that:

A. The respondents pay reasonable costs of Arthur
Anderson & Co. for taking an account of
profits derived by either Skyjack or Boss from
the sale of Superline 70 pens.
B. An indemnity in favour of Penney for costs on
a solicitor/client basis in relation to all
matters researching and preparing to take
legal action in Western Australia, New South
Wales, South Australia and Victoria in respect
of the parties' dealings with the pen within
fourteen (14) days of presentation of a demand
therefor.

The respondents would not sign the Deed incorporating these undertakings and between 28 and 30 June there were discussions between the solicitors for the parties with a view to resolving the dispute.

15. On 30 June Mr Mendelow of Parkers telephoned Mr Ryall of McPhee & Meyer and, according to his affidavit, told him that:

(a) That Parkers' clients would give undertakings
to Penney in accordance with items 1 and 2 of
the Deed of Undertaking drafted by Penney's
solicitors.
(b) That Parkers' clients would additionally
undertake to pay to Penney the sum of $5,000
within 7 days from 30 June 1989.

Ryall, he said, accepted the offer but suggested that Mendelow prepare a draft Deed of Undertaking for approval by Penney and for execution within 10 days. The consideration to be offered by Penney for the undertakings was not expressly mentioned. Ryall did not dispute Mendelow's account of the conversation.

16. A draft Deed was prepared and sent to Penney's solicitors on 4 July 1989. The draft Deed contained the proposed undertakings including a promise to pay $5,000. There was also a covenant to be given by Penney that the undertakings were made in "full and final satisfaction of all claims and actions howsoever arising (together with legal costs) in relation to the circumstances surrounding the allegations made by Geoff Penney that Skyjack, Boss and/or their authorized servants and agents breached the order of Mr Justice French dated 3 February 1989 made in Federal Court action No. WAG 84 of 1987, and further agrees that this Deed may be pleaded as a bar to any action by Geoff Penney against the Parties or any of them and/or their authorised servants or agents in relation to the circumstances surrounding the allegations mentioned herein".

17. On 4 July 1989 Penney's solicitors sent a fax letter advising that they were seeking their client's instructions on the proposed release, and warning that "such an amendment was not contemplated by the discussions held on 30 June 1989". By a fax letter sent the same day, Parkers asserted their clients' entitlement to the security of a release from further legal action. On 6 July 1989, Penney's solicitors responded with a fax letter including the following statement:

"It was our clear understanding that this matter was
settled last Friday 30 June 1989 by your client
through your Mr Paul Mendelow agreeing to pay the
sum of $5,000 and give the undertakings by
executing a Deed in terms of paragraphs 1 and 2 of
the Draft Deed we had sent to you. The remaining
terms of the Deed were to be removed by you at your
client's expense and be substituted for another
term of the Deed which provided for the payment of
the sum of $5,000 within 7 days. It was agreed the
Deed be executed by your clients within 10 days.
The draft Deed you forwarded to us required
execution by our client and a release to be granted
by our client. Our client now accepts this and
your subsequent demand for a form of release or
some acknowledgement of the consideration
supporting the promises as being a repudiation of
the settlement reached on 30 June 1989."

The letter then set out Penney's new demands in the following terms:

1. The sum of $7,500 to be paid by close of
business on Friday, 7 July 1989.
2. Execution by Parkers' clients of a Deed in the
form of the Deed of Undertaking previously
prepared by them with clauses 3, 4 and 5
deleted. Execution to be completed and the
Deed returned on or before close of business
on 11 July 1989.
3. The Deed should be amended to include an
acknowledgement by the parties that they had
been involved in the sale of the pen and/or
had aided, abetted, counselled or procured its
sale or offering for sale through the Boss
outlets in Adelaide.

The letter went on to indicate that in return for payment of the $7,500 and execution of the Deed, Penney would acknowledge in writing its forebearance to sue for breach of the Order made in the Federal Court or to move the Court for punishment for contempt and that it would forebear to sue upon any other cause of action arising from the respondents' involvement in the sale or offering for sale of the pen. The offer was said to be open until 5 pm on the same day. Parkers replied on 7 July renewing their assertion that the matter had been settled on 30 June and indicated that their clients remained ready, willing and able to perform the agreement reached and for that purpose tendered the sum of $5,000 and the agreed undertakings.

18. This tedious, costly and ultimately fruitless exchange was concluded by two more letters between solicitors on 12 and 21 July respectively, the latter setting out an unconditional undertaking by Parkers' clients not to sell, supply or offer the Superline 70 pen for sale anywhere within the Commonwealth and not to aid, abet, counsel or procure its sale or offering for sale. The undertaking was offered without admission of liability.
The Charge

19. By its notice of motion filed on 13 July 1989 Penney moved for orders including the punishment of Skyjack, Toby Carboni and Skyjack's directors for contempt by reason of the sales through the two Boss outlets. It also sought a permanent injunction against the respondents to prevent them from selling the Superline 70 pens through the agency of Boss or otherwise. The statement of charge was filed with the motion pursuant to O.40 r.6. It was there alleged that Boss had sold a Superline pen on 2 June 1989 from its premises at 12 Burbridge Road and again on 5 June from its Port Pirie shop. The common directorships of Boss and Skyjack were recited, they being Kede Peter Carboni, Cy Carboni, and Declan Christopher Ryan. The fact that Boss had assets subject to a charge in relation to moneys borrowed for the benefit of the Toby Carboni Family Trust was also set out, as was the fact that Kede and Cy Carboni are his sons. The allegation was then made, at para.9:

"Declan Christopher Ryan, Cy John Carboni and Kede
Peter Carboni being all of the directors of Boss
Computer and Office Supplies Pty Ltd aided abetted
counselled procured the sale or offering for sale
of the Superline 70 pen by Boss Computer and Office
Supplies Pty Ltd."

The preceding allegation was abandoned at the hearing and the following substituted in its place:

"Declan Christopher Ryan, Cy John Carboni and Kede
Peter Carboni, being all of the directors of Boss
Computer and Office Supplies Pty Ltd neglected to
take all reasonable precautions to make the
servants and agents of Boss aware of the order of
the Court dated 3.2.88 and further neglected to
take all reasonable precautions to ensure that the
Superline pens were not sold from Boss' retail
premises or otherwise."

Statutory Framework

20. The power of the Court to punish for contempt is conferred by s.31 of the Federal Court of Australia Act 1976:

"31(1) Subject to any other Act, the Court has the
same power to punish contempts of its power and
authority as is possessed by the High Court in
respect of contempts of the High Court and, where
the contempt relates to the exercise of
jurisdiction in a Division of the Court, the
jurisdiction to punish that contempt shall be
exercised in that Division of the Court.
(2) The jurisdiction of the Court to punish a
contempt of the Court committed in the face or
hearing of the Court may be exercised by the Court
as constituted at the time of the contempt."

Section 24 of the Judiciary Act 1903 provides that "the High Court shall have the same power to punish contempts of its power and authority as is possessed at the commencement of this Act by the Supreme Court of Judicature in England". As Wilcox J. observed in Flamingo Park Pty Ltd v Dolly Dolly Creation Pty Ltd [1985] FCA 123; (1985) 59 ALR 247 at 256, it is unsatisfactory that in a matter fundamental to the Court's authority to administer its affairs and maintain the authority of its orders, it should be necessary to follow the tortuous paths laid out by s.31 to ascertain the power available to the Court.

21. Order 40 sets up procedural requirements for contempt proceedings, including the requirement for the filing of a statement of charge:

"O.40 r.6 A statement of charge, that is, a
statement specifying the contempt of which the
accused person is alleged to be guilty, shall be
subscribed to, or filed with, the notice of motion
or application."

Whether a Contempt was Committed

22. In this case the applicant seeks orders for the punishment of Skyjack and its directors by reason of the sales made through the two Boss outlets in South Australia.

23. A contempt for breach of an injunction or other order of the Court may be committed when a party bound by the injunction breaches it or when some third party not so bound aids, abets, counsels or procures a breach - Seaward v Paterson (1897) 1 Ch 545 followed in Sharp v Deputy Federal Commissioner of Taxation 89 ATC 4059 at 4062 (Lockhart J.). In the former decision, Lindley L.J., in the Court of Appeal, drew a sharp distinction between the two cases:

"In the one case the party who is bound by the
injunction is proceeded against for the purpose of
enforcing the order of the Court for the benefit of
the person who got it. In the other case the
Court will not allow its powers to be set at naught
and treated with contempt. In the one case the
person who is interested in enforcing the order
enforces it for his own benefit; in the other case,
if the order of the Court has been contumaciously
set at naught the offender cannot square it with
the person who has obtained the order and save
himself from the consequences of his act."

Whether the conduct complained of is committed by a party bound by the order of the Court or by some other person, who knowing of that order sets the Court at defiance, the underlying rationale of the contempt power is the necessity to protect the public interest in the exercise of that power in the case of disobedience to an order. On the other hand it has been said that no public interest is served by punishing the offender if the only person for whose benefit the order was made choses not to insist on its performance - Australian Meat Industry Employees Union v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 66 ALR 577 at 584 and Attorney General v Times Newspapers Ltd (1974) AC 273 at 308.

24. In the present case the respondents contend that the applicant has settled the dispute and is bound by the terms of its compromise. I am not satisfied that any concluded agreement was reached, particularly having regard to the failure of the parties on 30 June to spell out the terms of any release to be given by Penney and the implicit reservation of that question to a draft Deed to be approved. But even if some such release had been agreed, I am inclined to doubt whether it would operate as a bar in proceedings of this character particularly in regard to those directors of Skyjack who were not parties to the consent orders made on 3 February 1988. I accept however, that the parties to contempt proceedings may resolve their differences in a way that recognises the authority of the Court and that such resolution may be put into effect or at least taken into account by the Court in disposing of the matter. And it may be that a compromise will give rise to contractual obligations between the parties. Having regard to my view of the alleged compromise however, it has no part to play in the outcome of these proceedings and the question for determination is whether or not any contempt has been committed.

25. The only persons bound directly by the terms of the consent orders made on 3 February 1988 were Skyjack, Toby Carboni and Malcolm Craig. There can have been no contempt unless there was a breach of that injunction. There can be no breach of the injunction unless Skyjack or its then directors sold, supplied or offered the Superline 70 pen for sale anywhere within Australia after 3 February 1988. The disposition of the pens to Boss in November 1987 pre-dated the Court's order upon which these proceedings are based and cannot constitute a breach of it. The question then follows whether in selling the pens in June 1989, Boss was acting as agent for Skyjack. The applicant's case was presented on the basis that it was so acting although no allegation in those terms was made in the statement of charge. In my opinion, although it is clear that there was a close relationship between Skyjack and Boss and although it is clear that they served common interests, the evidence does not support the conclusion that Boss acted as Skyjack's agent.

26. If one member of a group of companies be enjoined from committing certain acts, it does not follow that it is to be held responsible for the commission of such acts by others even when there be a close link between them unless it can be shown that the others were acting as its agents in the sense that their acts were done on behalf of the enjoined company. In Ronson Products Ltd v Ronson Furniture Limited (1966) 1 Ch 603, the defendant company gave undertakings that it would not use the word "Ronson" in connection with its business except under certain defined constraints. In finding the company and its directors guilty of contempt, Stamp J. took what some might regard as a narrow approach to the operation of injunctive orders when he said at p 610:

"It was open to Mr Ronson to form other companies,
which could, of course, have done the acts which
the defendant company had undertaken not to do. He
could have formed a group of new companies calling
itself the Ronson Group of Companies, and each of
those new companies could have described itself as
a member of the Ronson Group. Whatever other
remedy the plaintiffs might have against those new
companies or against Mr Ronson himself, proceedings
to enforce the undertaking given by the defendant
company would not be among those remedies."

That approach may properly be supported by reference to the serious consequences that can be visited upon those who are found to be in contempt for breach or for aiding or abetting the breach of an injunctive order. I do not consider it to have been intended, and it should not be interpreted, as a licence to enter into schemes or sham transactions under cover of which the party enjoined seeks, by itself or agents, to defeat the operation of the Court's order. The hazards of such endeavours are illustrated in the Canadian case of Beloit Can Ltee/Ltd v Valmet Oy (1986)) 11 CPR (3d) 470. On the other hand as two further references to the law reports of that country illustrate, suspicion concerning arrangements made by the defendant will not suffice to establish a breach - Island Glass Limited v O'Connor (1981) 40 Nfld and PEIR 361; Performed Line Products Co. v Payer Electric Fittings Co. (1965) 1 Ex C R 371. The question ultimately is one of the proper construction of the injunction and the conduct said to constitute the breach or contempt. There is no general spirit of compliance or co-operation emanating from injunctive orders to be observed by all who fall under its influence. See for example Northern Counties Securities Ltd v Jackson & Steeple Ltd (1974) 2 All ER 625. In Thorne Rural District Council v Bunting (No. 2) (1972) 3 All ER 1084, a case in which an undertaking given by one member of a family was frustrated by the lack of co-operation of two other members, Russell L.J., with whom Buckley and Orr L.JJ. agreed, said at 1087 in the Court of Appeal:

"Counsel for the council has fought doughtily,
wielding general propositions based on six lines in
the Salkeld report (Ie Butler's Case (1696) 2 Salk
596) that if anybody does anything which tends to
deprive a plaintiff of the fruits of an order, they
are in contempt of court. All I can say is, I
cannot see it at all. It will be observed, as I
ventured to observe in the course of the hearing,
that what are the fruits of the order depends on
the order. They may be dessert apples or they may
be crab apples:..."

As Buckley L.J. added, while it is well established that a stranger to an action who aids and abets a breach of an undertaking or an injunction by a party to an action is himself particeps criminis and guilty of contempt of court, he cannot be guilty where there is no breach. A more qualified proposition along similar lines was expounded in the Ontario Court of Appeal in Bassel's Lunch Ltd v Kick (1937) 1 DLR 235 where MacDonnell J.A. delivering the judgment of the Court said:

"An injunction restraining A from doing some act is
not an injunction restraining B or C from doing it.
In many instances, also, the fact that B or C do
the act prohibited to A, does not amount to any
assisting or aiding of A by B or C; the latter may
be acting quite independently of A. On the other
hand it is sophistry to argue that, because A
refrains from doing the act, therefore B or C's
doing it in his place is not assisting or aiding
him. Where B and C act not independently but
because of their interest in A, it may well be held
that they are assisting or aiding him; at least
they are intermeddling and so may be found guilty."

Although that judgment may support a broad notion of agency in relation to the breach of injunctive orders, I am not satisfied that Boss sold the pens under the authority or with the consent of Skyjack or on any basis which would enable it to be treated as Skyjack's agent for the purposes of these proceedings. On the contrary, I am satisfied that the sale occurred without any authority or consent, tacit or otherwise, on the part of Skyjack and against express instructions given by Kede Carboni. The fact that the sale occurred was not the result of any intentional or wilful act on the part of any of the directors of either Boss or Skyjack. If Boss had been bound by the injunction the sale might have constituted a breach although not authorised by its directors or senior management and contrary to their express instructions - Upholsterers International Union of North America v Hankin and Struck Furniture Ltd (1964) 49 WWR 33. But Boss was not bound by the order and in the absence of an agency relationship or evidence that the sale of the pens was in furtherance of a scheme entered into with Skyjack or its directors to circumvent the order, the impugned sales cannot be attributed to anyone bound by the injunction. In my opinion, there has been no breach of the order made on 3 February and no contempt by Skyjack or the other parties to whom these proceedings are directed. The motion will be dismissed with costs.