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Federal Court of Australia |
Last Updated: 31 July 2002
Australian Competition & Consumer Commission v INFO4PC.com Pty Ltd [2002] FCA 949
CONTEMPT OF COURT - nature of contempt - standard of proof - relevance of intent - whether first respondent committed contempt of court in failing to comply with orders restraining it from advertising on a website - nature of "advertising"
CONTEMPT OF COURT - whether first and second respondents each committed second contempt of court in failing to comply with orders restraining them from making certain withdrawals from accounts with financial institutions - whether receipt of cash from staff after cashing of wages cheques constitutes "cash withdrawal" - whether second respondent was director or de facto director of first respondent
SENTENCING - contempt of court - rationale of sentence - seriousness of a contempt - intent of contemnor
The Constitution s 71
Federal Court of Australia Act 1976 (Cth) s 31
Corporations Act 2001 (Cth) ss 9, 60(1)(a), 60(1)(b)
Judiciary Act 1903 (Cth) s 79
Criminal Code (WA) s 7
Federal Court Rules O 40 r 6 and r 8
Borrie et al The Law of Contempt 3rd ed. 1996 at pp 559 - 560
Miller Contempt of Court 3rd ed. 2000 at p 672
Oxford English Dictionary, vol.1, p 138
The New Shorter Oxford English Dictionary (Clarendon Press, Oxford, 1993) pp 32, 1671 - 2
The Macquarie Dictionary, 2nd ed. pp 70, 23 - 24, 1074
Walker The Oxford Companion to Law Clarendon Press 1980 at p 35
Re Colina; Ex parte Torney (1999) HCA 57 referred to
Morris v Crown Office (1970) 2 QB 114 referred to
Australasian Meat Industries Employees' Union v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 161 CLR 98 applied
Trade Practices Commission v Optus Communications Pty Ltd (Beaumont J, 9 August 1995, unreported) referred to
Australian Consolidated Press Ltd v Morgan [1965] HCA 21; (1965) 112 CLR 483 referred to
Witham v Holloway [1995] HCA 3; (1995) 183 CLR 525 applied
Construction, Forestry, Mining & Energy Union v BHP Steel (AIS) Pty Ltd [2001] FCA 1758 considered
Concrete Constructions Pty Ltd v Plumbers and Gasfitters Employees Union (No 2) (1987) 15 FCR 64 referred to
Australian Competition and Consumer Commission v Hughes [2001] FCA 38 discussed
Re Garage Equipment Association's Agreement (1964) LR 4 RP 491 referred to
Coward v Stapleton [1953] HCA 48; (1953) 90 CLR 573 followed
Stancomb v Trowbridge Urban District Council [1910] 2 Ch 190 followed
Rothmans of Pall Mall v Australian Broadcasting Tribunal (1985) 5 FCR 330 followed
Deputy Commissioner of Taxation v Rotary Offset Press Pty Ltd (1971) 45 ALJR 518 approved by the High Court (1972) 46 ALJR 609 followed
Al Hayat Publishing Co Ltd v Ahmed Sokarno Eman Mohamed (Tamberlin J, 28 February 1997, unreported) followed
Harmsworth v Harmsworth [1987] 1 WLR 1676 referred to
Hersfield Developments Corporation Pty Ltd v Melbourne and Metropolitan Board of Works (1981) 46 LGRA 180 considered
Re Media Council of Australia and others (1996) ATPR 41-497 referred to
Re Media Council of Australia Authorisation; Re Australian Consumer's Association Application (1987) 88 FLR 1 referred to
Director of Public Prosecutions v United Telecasters Ltd [1990] HCA 5; (1990) 168 CLR 594 referred to
Export Development Grants Board v Geoffrey Thompson and Growers Co-operative Company Pty Ltd (1985) 6 AAR 276 distinguished
Ex parte Tziniolis; Re Harvey (1959) 76 WN (NSW) 686 referred to
Hoover Co (Australia) Pty Ltd v Spackman (1998) 162 ALR 215 referred to
Queensland Television Ltd v Australian Broadcasting Tribunal (1987) 17 FCR 246 referred to
Windsurfing International Inc v Sailboards Australia Pty Ltd (1986) 19 FCR 110 followed
Z Ltd v A-Z & AA-LL [1982] 1 QB 558 referred to
James v Robinson [1963] HCA 32; (1963) 109 CLR 593 referred to
John Fairfax & Sons Pty Ltd v McRae [1955] HCA 12; (1955) 93 CLR 351 referred to
Richborough Furniture Ltd [1996] BCLC 507 referred to
McCarthy v Wheeler (Hedigan J, 16 September 1998, unreported) referred to
Chang Hang Kiu v Piggott [1909] AC 312 referred to
ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 referred to
Australian Securities Investments Commission v Matthews (1999) 32 ACSR 404 referred to
Re Bramblevale Ltd [1970] 1 Ch 128 referred to
Natcomp Technology Australia Pty Ltd v Graiche (2001) 19 ACLC 1117 discussed
Deputy Commissioner of Taxation v Austin (1998) 16 ACLC 1555; (1998) 28 ACSR 565 followed
Patrick Walker, Commissioner for Fair Trading v Info4pc.com Pty Ltd [2000] WASC 212 considered
Rogers v R [1994] HCA 42; (1994) 181 CLR 251 followed
Gallagher v Durack [1983] HCA 2; (1983) 152 CLR 238 referred to
Flamingo Park Pty Ltd v Dolly Dolly Creation Pty Ltd (1985) 5 FCR 169 followed
Australian Competition & Consumer Commission v Goldstar Corp Pty Ltd (Drummond J, 6 November 1998, unreported) referred to
Attorney-General v Times Newspapers Ltd [1992] 1 AC 191 referred to
McNair Anderson Associates Pty Ltd v Hinch [1985] VR 309 referred to
Degman Pty Ltd (in liq) v Wright (No 2) [1983] 2 NSWLR 354 considered
Hinch v Attorney-General [1987] HCA 56; (1987) 164 CLR 15 referred to
Australian Industry Group v Automotive Food Metals Engineering Printing and Kindred Industries Union [2000] FCA 708 referred to
BHP Steel (AIS) Pty Ltd v Construction, Forestry, Mining and Energy Union [2002] FCA 792 followed
Marron v Salvemini; Re Scardigno [1969] WAR 178 referred to
Sunibrite Products (Australia) Pty Ltd v Jabuna Pty Ltd (1980) 47 FLR 73 referred to
In the Will of Mary Johnson (1907) 24 WN(NSW) 124 referred to
Attorney General v Walthamstow Urban District Council (1895) 11 TLR 533 referred to
Lee v Aylesbury Urban District Council (1902) 19 TLR 106 referred to
Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation [2001] HCA 26; (2001) 179 ALR 406 referred to
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v INFO4PC.COM PTY LTD and JAMES RAE
S 17 of 2001
RD NICHOLSON J
31 JULY 2002
PERTH
IN THE FEDERAL COURT OF AUSTRALIA |
|
WESTERN AUSTRALIA DISTRICT REGISTRY |
S 17 of 2001 |
1. The first respondent is guilty of contempt by reason of its breach of the orders made by von Doussa J on 24 January 2001 in proceeding S17 of 2001.
2. The first and second respondents are each guilty of contempt by reason of each of their breaches of the orders made by von Doussa J on 24 January 2001 and RD Nicholson J on 31 January 2001, 8 February 2001 and 15 February 2001 in proceeding S17 of 2001.
THE COURT ORDERS THAT:
3. In respect of the contempt referred to in par 1 above the first respondent be fined the sum of $2,000.00.
4. In respect of the contempt referred to in par 2 above the first respondent be fined the sum of $8,000.00.
5. In respect of the contempt referred to in par 2 above the second respondent be fined the sum of $4,000.00, such fine to be paid to the District Registrar, Federal Court of Australia, 1 Victoria Avenue, Perth.
6. The first respondent pay the applicant's costs of the contempt referred to in par 1 above being all costs except insofar as they are of an unreasonable amount or were unreasonably incurred so that, subject to such exceptions, the applicant will be completely indemnified by the first respondent in respect of that contempt.
7. In respect of the contempt referred to in par 2 above the first respondent and the second respondent pay the applicant's costs in respect of that contempt being all costs except insofar as they are of an unreasonable amount or were unreasonably incurred so that, subject to such exceptions, the applicant will be completely indemnified by the first and second respondents in respect of that contempt.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA |
|
WESTERN AUSTRALIA DISTRICT REGISTRY |
S 17 of 2001 |
BETWEEN: |
AUSTRALIAN COMPETITION AND CONSUMER COMMISSION APPLICANT |
AND: AND: |
INFO4PC.COM PTY LTD (ACN 094 149 149) RESPONDENT JAMES RAE SECOND RESPONDENT |
JUDGE: |
RD NICHOLSON J |
DATE: |
31 JULY 2002 |
PLACE: |
PERTH |
1 These reasons address motions brought by the applicant dated 31 January 2001 and 7 May 2001 seeking orders punishing (in the case of the first alleged contempt) the first respondent and/or its servants or agents and (in the case of the second alleged contempt) the first and second respondents for contempt of this Court. These reasons address each of the motions.
PRELIMINARY MATTERS
Justiciability
2 The jurisdiction of the Court to punish contempts arises from s 31 of the Federal Court of Australia Act 1976 (Cth). It has by virtue of that section such power and authority as is possessed by the High Court in respect of contempts of that court. The section therefore does not create an offence of contempt but is declaratory of an attribute of judicial power of the Commonwealth vested in federal courts by s 71 of the Constitution: Re Colina; Ex parte Torney (1999) HCA 57 [16] per Gleeson CJ and Gummow J. Contempt of court is a distinctive offence attracting remedies which are sui generis: Morris v Crown Office (1970) 2 QB 114 at 129 referred to by the High Court in Australasian Meat Industries Employees' Union v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 161 CLR 98 at [115] In the proceedings for contempt, the Court ought not to attempt to resolve the questions which are to be litigated at the hearing of the suit itself: Trade Practices Commission v Optus Communications Pty Ltd (Beaumont J, 9 August 1995, unreported), referring with approval to Australian Consolidated Press Ltd v Morgan [1965] HCA 21; (1965) 112 CLR 483 at 489 - 490 per Barwick CJ.
3 Order 40 of the Federal Court Rules makes provision in respect of the procedure for commencement of charges of contempt. No issue arises pursuant to those Rules in this matter.
Standard of proof
4 In Witham v Holloway [1995] HCA 3; (1995) 183 CLR 525 the High Court concluded that all proceedings for contempt must realistically be seen as criminal in nature. The consequence is that charges of contempt have to be proved to the standard of beyond reasonable doubt. This position was recently accepted by Lee and Finn JJ in the Full Court in Construction, Forestry, Mining & Energy Union v BHP Steel (AIS) Pty Ltd [2001] FCA 1758 at par [28] although with advertence to equivocations surrounding the principles applicable in the area. They said:
"Liability for the imposition of a penalty on proof of a civil contempt, and the blurred distinction between civil and criminal contempt, make it appropriate that there be no distinction between the standard of proof required for the proof of complaints of civil or criminal contempt. Therefore, the standard of proof required is proof beyond reasonable doubt. (See: Witham v Holloway [1995] HCA 3; (1995) 183 CLR 525; C. O'Regan Contempt of Court and the Enforcement of Labour Injunctions (1991) 54 MLR 385, 393-394; Microsoft Corporation v Marks (1996) 69 FCR 117)."
Onus of proof
5 It is not in question that the onus of proof rests upon the party bringing the charge of contempt to make out that charge to the requisite standard of proof.
Nature of contempt
6 It is the general rule that it is the duty of those who are subject to an order of a court to strictly observe the terms of the order (Borrie et al The Law of Contempt 3rd ed. 1996 at pp 559 - 560).
7 It is not necessary for a court to prescribe the manner in which the required result is to be achieved and it is sufficient if the court clearly specifies that a respondent is to carry out a particular course of conduct (Concrete Constructions Pty Ltd v Plumbers and Gasfitters Employees Union (No 2) (1987) 15 FCR 64 at 72 - 73 per Wilcox J). It is not for the applicant to suggest, or for the Court to prescribe, a particular method of compliance (Australian Competition and Consumer Commission v Hughes [2001] FCA 38 at par 17).
8 A company will commit a contempt through a failure to comply with an order (including a mandatory injunction) of which it has formal notice even though none of its directors or officers was aware of the breach: Re Garage Equipment Association's Agreement (1964) LR 4 RP 491 (Miller Contempt of Court 3rd ed. 2000 at p 672).
9 It has long been accepted that a person should not be punished for contempt unless the specific charge against him or her be distinctly stated and an opportunity of answering it given to that person: Coward v Stapleton [1953] HCA 48; (1953) 90 CLR 573 at 579 - 580. Order 40 r 6 and r 8 of the Federal Court Rules requires the statement of charge to specify the contempt alleged so as to allow the accused person to know the case he or she has to meet and defend: Concrete Constructions Pty Ltd v Plumbers and Gas Fitters Employees' Union (No 2) (1987) 15 FCR 64 at 73. In Construction, Forestry, Mining & Energy Union at par [31] per Lee and Finn JJ it was accepted that if the statement of charge itself does not sufficiently specify the contempt, the affidavit evidence served with the statement cannot be relied upon to remedy the deficiency: Harmsworth v Harmsworth [1987] 1 WLR 1676 at 1683.
Intent
10 It is not necessary to prove any subjective intent to deliberately disobey an order of the Court (Stancomb v Trowbridge Urban District Council [1910] 2 Ch 190 at 194; Australian Competition and Consumer Commission v Hughes at [20]; Rothmans of Pall Mall v Australian Broadcasting Tribunal (1985) 5 FCR 330; Deputy Commissioner of Taxation v Rotary Offset Press (1971) 45 ALJR 518). It is sufficient if the person or the corporation is aware of the order and intentionally does an act or omits to perform an act with the result that there a breach of the order: Al Hayat Publishing Co Ltd v Ahmed Sokarno Eman Mohamed (Tamberlin J, 28 February 1997, unreported) at 6. Deliberate defiance or contumacious disregard of the order is relevant to the determination of an appropriate sanction: ibid.
CONTEMPT MOTION OF 31 JANUARY 2001 IN RESPECT OF THE FIRST RESPONDENT ("first contempt")
Statement of Charge
11 The Statement of Charge for the first contempt motion reads as follows:
"1. On 24 January 2001 Justice von Doussa made orders in the within proceedings including, inter alia, an order that:The [First] Respondent by its servants, agents or otherwise be restrained from advertising, continuing to advertise and/or accepting orders for computers and/or upgrades to computer systems from the date of service of this order until 31 January 2001 at 5:00 WST in the afternoon.
2. The said order was served on the [First] Respondent on 25 January 2001.
3. On 30 January 2001 the internet website located at http://Info4pc.com.au contained words amounting to an advertisement soliciting orders for computers and upgrades for computer systems."
Evidence
12 For the applicant reliance was placed upon an affidavit of Ian Theodore Nicholas sworn on 30 January 2001 and an affidavit of Henry Karl Pelka sworn on 23 January 2001.
13 For the first respondent an affidavit of the second respondent sworn on 13 February 2001 was introduced into evidence and he was cross-examined on it.
14 Following the hearing of the first alleged contempt an affidavit of Carolyn Corteen sworn on 14 August 2001 was filed on behalf of the first respondent. Objection has been taken on behalf of the applicant to its admission. The affidavit is said to be relevant to a suggestion that Mr Nicholas did not in fact view the first respondent's website at the relevant dates. That was not an issue put to Mr Nicholas. Nor is the issue one on which cross-examination of the second respondent is now available. I allow the applicant's objection to the admission of M/s Corteen's affidavit. It follows that the affidavit of Mr Nicholas sworn on 29 June 2001 and (so far as it may arguably have any relevance) the affidavit of Mr Jones sworn on the same date are not admitted into evidence.
Grounds of alleged contempt
15 The grounds relied upon in the notice of motion are those appearing in the Statement of Charge. The principle evidence relied upon in support is the affidavit of Mr Nicholas, a senior investigator employed by the applicant. On the date of his affidavit (being six days after the making of the order by von Doussa J) he searched the internet website located at http://info4pc.com. From his evidence it is established that on the website the respondent described the nature of its business in the following terms:
"As a commercial entity, Info4pc.com has invested its marketing into the community by providing heavily discounted PC's to the public and leaving the rest largely to word of mouth advertising as our first batch of PC's are delivered to participants. When we have sufficient participants we will realise our return on our investment in mainly two ways:Firstly through commissions earned on the sale of products and services made available at low, low prices on our site. This made possible through the negotiating power of a large consumer group that info4pc.com Pty will have in its participants. Info4pc.com has a continuous program of negotiating special offers for products and services, from mobile phones and cars to mortgages and holidays - the details of which will appear on this site for participants only.
Secondly through the sale of statistical data generated through the monthly questionnaires which can provide commerce with marketing information that is both current and accurate."
It was not disputed that the Court should understand the description "PC's" as a reference to "personal computers".
16 At a subsequent place on the website the following passage appeared:
"After applying to take part in the largest Internet Survey ever conducted in Australia and sent in my $499 how soon will I receive my computer?Once we receive your application and payment of $499, the process will take approximately 8 to 10 weeks, for the delivery of your NEW computer. It is our express aim to fulfill all deliveries as stated, however we cannot offer any guarantees simply because we have no control over delays emanating from our suppliers or their component manufacturers. In the event of any such delay you will be notified and offered an opportunity to either accept a later delivery date or cancel your application, upon which you will receive a full refund, with no deductions whatsoever."
17 Shortly after the preceding passage the internet site contained the following words:
"What software is the PC delivered with, and can I upgrade the specification of my PC?Definitely Windows 98 and probably Lotus SmartSuite Millennium, although this may change, if another OEM package is made available, and deemed to be of better value. PC upgrades will need to be made before delivery, and a choice of available hardware upgrades with their optional extra costs can be found on the info4pc.com website."
18 At a later portion of the website there appeared forms entitled "Application for Participation in Internet and Lifestyle Survey". One form was designated for South Australian use only and one for Northern Territory use only. On each appeared the following statement:
"I/we will answer all the questions in the monthly questionnaires, which will be placed on the www.info4pc.com.au web site, on 1st of each month. I/we will ensure that info4pc.com Pty Ltd will have my/our current postal and email address(es) and home telephone number, throughout the whole of this 24-month agreement. I/we will pay the $499 administration/delivery fee by cheques in order to secure my/our application to participate in the survey. Upon acceptance on to the survey, Info4pc will supply a personal computer in pre-payment for an applicant's future participation. Upon acceptance on to the survey applicant(s) will become known as participant(s) for the purpose of the agreement above."
19 The ground which appears in the Statement of Charge is that on 30 January 2001 the above website "contained words amounting to an advertisement soliciting orders for computers and upgrades for computer systems".
Nature of "advertising"
20 The applicant's case hinges on the allegation that what was contained in the respondent's website on the relevant dates amounted to an advertisement for computers within the meaning of von Doussa J's orders of 24 January 2001.
21 The Macquarie Dictionary defines "advertise" (at p 23-24) as:
" ... 1. to give information to the public concerning; make public announcement of, by publication in periodicals, by printed posters, by broadcasting over the radio, television, etc. ... 2. to praise the good qualities of, in order to induce the public to buy or invest in. 3. to offer (an article) for sale or (a vacancy) to applicants, etc., by placing an advertisement in a newspaper, magazine, etc.: ... 4. Archaic. to give notice, or information to; inform. 5. Obs. to admonish; warn. ... 6. to ask (for) by placing an advertisement in a newspaper, magazine, etc. ..."
22 The dictionary definition of "advertise" as it appears in The New Shorter Oxford English Dictionary (Clarendon Press, Oxford, 1993) at p 32 is:
"4 v.t. Give notice of; make generally or publicly known. ... Call attention to by a published announcement; describe or present (goods, services) publicly with a view to promoting sales. ... 5 ...Give warning or information ...b ...Make an announcement in a public place; describe or present goods publicly with a view to promoting sales."
An advertisement may be constituted by "a general intimation or announcement": Walker The Oxford Companion to Law Clarendon Press 1980 at p 35.
23 In Hersfield Developments Corporation Pty Ltd v Melbourne and Metropolitan Board of Works (1981) 46 LGRA 180 at 186 McGarvie J said:
"It has been held that the ordinary meaning of the word "advertise" is to make generally or publicly known, or to give public notice of something. Deputy Commissioner of Taxation (Commonwealth) v Rotary Offset Press Pty Ltd (1971) 45 ALJR 518 at p 521; upheld on appeal, 46 ALJR 609. Ex parte Tziniolis; Re Harvey (1959) 76 WN (NSW) 686 at p 689. The word in its various grammatical forms has been given a wide meaning in many of the cases, eg London County Council v Cawardine (1892) 62 LJ (NS) MC 40; Westminster Gazette v Bell (1925) 69 Sol Jo 590; Ex parte Bowen; Re Blumer [1962] NSWR 445 and Reynolds v John [1956] 1 QB 650. The context may indicate that a narrower meaning is intended; see Deputy Commissioner of Taxation (Commonwealth) v Rotary Offset Press Pty Ltd and Re Lane; Ex parte Ambassador College (1971) 45 ALJR 548."
24 Advertising can comprise different activities. It is a device to communicate a defined message to segments of the community (Re Media Council of Australia and others (1996) ATPR 41-497 at 42,241 per Lockhart J), which includes sales promotion messages that are conveyed by the media and `consumed' independently of the purchase of the products (or services) being promoted (Re Media Council of Australia Authorisation; Re Australian Consumer's Association Application (1987) 88 FLR 1 at 24 per Lockhart J). Material which is designed or calculated to draw public attention to a product or to promote its use may be advertising (Director of Public Prosecutions v United Telecasters Ltd [1990] HCA 5; (1990) 168 CLR 594 at 598 per Brennan, Dawson and Gaudron JJ; Rothmans v Australian Broadcasting Tribunal (1985) 5 FCR 330 at 343).
25 An advertisement may be constituted by implication where it is clear that the reader is to understand, by reason of the design of the "advertisement" that a thing is being advertised (Ex parte Tziniolis; Re Harvey (1959) 76 WN (NSW) 686 at 689 per Moffitt AJ; Rothmans v Australian Broadcasting Tribunal (1985) 5 FCR 330; and Hoover Co (Australia) Pty Ltd v Spackman (1998) 162 ALR 215 at 218 per Heerey J).
26 Advertising is recognised to possess the following unique characteristics: it is a non-personalised message of `broadcast' character; one person's consumption does not detract from its availability to others and there is no charge at the point of consumption of the message; consumers are exposed to advertising by its very publication or dissemination, (there is no imposition of price or requirement to decide whether the expected utility would justify purchase at a cost); and it need not be separate, in fact advertising messages are often intermingled with other, sometimes unwanted, media content and consequently difficult for the consumer to avoid contact with the advertising message. Re Media Council of Australia Authorisation; Re Australian Consumer's Association Application (1987) 88 FLR 1 at 27 - 28 per Lockhart J.
27 Advertising matter does not cease to be such merely because a significant portion of the material is free of any discernible commercial message (Rothmans v Australian Broadcasting Tribunal (1985) 5 FCR 330 at 339; Deputy Commissioner of Taxation v Rotary Offset Press Pty Ltd (1971) 45 ALJR 518 at 522 per Gibbs J (approved by the High Court (1972) 46 ALJR 609); Queensland Television Ltd v Australian Broadcasting Tribunal (1987) 17 FCR 246 at 263 per Spender J). Nor does it so cease because the "advertisement" is calculated to serve additional purposes such as to instruct (Rothmans v Australian Broadcasting Tribunal (1985) 5 FCR 330 at 339; Deputy Commissioner of Taxation v Rotary Offset Press Pty Ltd (1971) 45 ALJR 518 at 522 per Gibbs J (approved by the High Court (1972) 46 ALJR 609); Queensland Television Ltd v Australian Broadcasting Tribunal (1987) 17 FCR 246 at 263 per Spender J). Likewise, the fact that the transmission of the material was not paid or otherwise rewarded (Rothmans v Australian Broadcasting Tribunal (1985) 5 FCR 330 at 341) or is not associated with the derivation of profit (Queensland Television Ltd v Australian Broadcasting Tribunal (1987) 17 FCR 246 at 263 per Spender J) does not cause the advertising material to cease to have that character.
Case for the applicant
28 The case for the applicant is put in the following way.
29 There can be no doubt that the first respondent's website did in fact give notice of and make known its preparedness to supply computers (and the process thereof). This derives from a reading of the whole of the material annexed to the affidavit of Mr Nicholas and also from a reading of that material in conjunction with the printed advertisements which are annexed to the affidavit of Mr Pelka. The second respondent conceded (under cross-examination) that the latter might need to be read together with the former so far as concerned those persons whose attention had been directed to the website by the printed advertisements. He also admitted in cross-examination that the completion of an application form (of which copies appear on the website) was a necessary step in the conclusion of a (contractual) relationship which culminates in the receipt by a customer of a computer.
30 Next it is submitted that there is no reason why material found on a website cannot constitute advertising. It satisfies all applicable tests and is in substance, no different from any printed notice or billboard. The applicant is unable to locate any authority which assists in connection with this point.
31 It is submitted further that the second respondent admits to having received a copy of von Doussa J's orders on 25 January 2001. Although he stated it was amongst 175 pages he received, he did not say that he did not read it. Indeed, the contents of pars 16, 17 and 20 of his affidavit suggest the contrary - that he read and considered its meaning. It must follow then that if the website amounted to advertising, the first respondent is guilty of contempt if, contrary to his claims, he was a director of the first respondent at that time.
Defence case for the first respondent
32 The second respondent made various submissions for the first respondent which may be formulated and addressed in the manner now set out.
Website not generally or publicly known
33 He submitted that whether there was any contempt does not depend on whether what was contained on the first respondent's website amounted to advertising within the meaning of von Doussa J's order of 24 January 2001. It is said this is because there was no "advertising" as the website was neither generally, ie commonly or usually, or publicly, ie widely or freely, known. It was not advertised in any other media at the time. The only people who would have been aware of it would have been those who had seen previous print media, the last of which was placed on 12 December 2000. However, there is no evidentiary foundation for these latter assertions.
34 In reply it is submitted for the applicant that the first respondent's potential circulation being via the internet was likely to be seen by a very great number of people. The applicant submits that people would have been aware of the first respondent's website address by various means, including but not limited to, the printed advertisements, word of mouth and internet search engines. It is likely that the substance of the printed advertisements would have been retained by people even if the actual advertisement was not.
35 For the first respondent it is submitted by the second respondent this latter statement is unreasonable because the print advertisement was placed in a weekly publication which preceded the order of von Doussa J by some six and a half weeks. Again, there is no evidentiary foundation for that assertion.
36 There is no evidence that the website was attached to any search engines. However, there is evidence that attention might be drawn to the website as a result of radio advertisements and as the result of calling the first respondent's information telephone number or switchboard. Other evidentiary assertions for the first respondent in written submissions in reply lie outside the admitted evidentiary matrix.
37 It is further submitted that whether there was a contempt depends on whether the first respondent or its officers considered the website to be advertising. I agree with the submission for the applicant that such test is not the appropriate one. The test is whether a reader would understand that something was being advertised.
38 Nor is the case for the defence assisted by endeavouring to characterise the function of the website being "to inform". The question is whether the website content constituted "advertising".
39 In my opinion there is nothing in the context of the orders of von Doussa J which indicates that any meaning other than the ordinary meaning of the words "advertising" or "advertise" was intended in those orders. Having examined the material found on the first respondent's website, I find that the material was intended to give information to the public and make public announcement concerning the matters to which it related. Subject to the following consideration of further contentions for the first respondent, I am satisfied beyond a reasonable doubt that such website material constituted "advertising".
No purchase involved
40 It is submitted by the second respondent for the first respondent that the arrangements referred to on the website did not involve any element of sale and purchase and so could not constitute advertising. He submitted there are three reasons for this. Firstly, a person wishing to become part of the survey paid an application fee for joining the survey, which was to be used in administration and delivery. If that person was accepted into the survey, they would be given a computer to assist them in answering the survey. Should they fail to answer the questions, they would be initially charged a penalty of $25 per month for each survey missed and ultimately $1500 less $50 for each completed survey (see the application form). The nature of a sale means that a seller cannot request further payments once an item has been purchased by the purchaser (excepting of course hire purchase type agreements which do not apply in this case). Hence no participant in the survey could have claimed to have purchased a computer and conclusively the first respondent could not have sold a computer. Secondly, any contractual relationship entered into was not one for sale of a computer, even though the participant was to be given a computer in prepayment for participation in the survey. Thirdly, the simple completion of an application form did not guarantee a participant would be accepted to the survey and therefore did not guarantee any person the receipt of a computer.
41 In reply it is submitted for the applicant that the claim that the first respondent was not a "retailer" of computers and only supplied computers incidentally to the collection of marketing data, does not detract from the fact that the payment of money was a part (albeit not the whole) of the consideration for the supply of a computer. Accordingly, any material designed to induce members of the public (explicitly or otherwise) to enter into an arrangement with the respondent as a result of which money would be paid and a computer received constituted "advertising". Additionally, it is submitted the principle applicable to purchase is equally applicable to services.
42 Examination of the website material at issue here discloses it has the following features. It advised readers that the first respondent "has invested its marketing into the community by providing heavily discounted PC's to the public and leaving the rest largely to word of mouth advertising as our first batch of PC's are delivered to participants". In my view that statement is capable only of giving rise to an understanding in the mind of the reader that the purpose of the first respondent's work (and hence of the advertisement) was to increase the successful marketing of heavily discounted PC's by contracts resulting for their acquisition. The literature read as a whole directed the reader's mind to the importance of that acquisition of a computer. Upgrades, warranties and internet usage references all focussed the reader's attention on the PC. I find the website material is properly characterised as directed to soliciting orders for computers and upgrades for computer systems. If an element of purpose to contract is necessary to constitute an advertisement, I therefore consider there was one present and these contentions for the first respondent do not negate the existence of an advertisement in the form of the website material.
43 In any event I do not consider that an element of purpose to contract is a necessary component of an advertisement. It may be that such a purpose is the raison d'etre for most advertisements. However, reference to the dictionary definitions and authorities previously cited on the nature of advertising shows conclusively that such purpose is not a prerequisite of an advertisement. In Export Development Grants Board v Geoffrey Thompson and Growers Co-operative Company Pty Ltd (1985) 6 AAR 276 at 277 Smithers J said "the essential feature of advertising or soliciting is communication of something thought likely to induce another to purchase goods which one wishes to sell". However, he was addressing expenditure in respect of which the dominant notion was that of obtaining business by advertising. Furthermore, there is no reason why the notion of advertising should be confined to goods: it extends equally to realty and services.
44 Accordingly, this issue does not raise a reasonable doubt for the defence.
Subject-matter of advertisement
45 In reaching the preceding view I have necessarily rejected the next contention for the first respondent which is that the website material was directed not to computers but to payment of a fee to join a survey.
Steps to comply with order
46 Additionally, it is contended whether there is a contempt should be judged by reference to whether reasonable steps were taken to comply with the orders of von Doussa J. Specifically it is contended by the second respondent for the first respondent that after 25 January 2001 the first respondent did not advertise for the sale of computers or accept any orders. In respect to the upgrades, these were only available to participants accepted to the survey as additions to the system being given to them by the first respondent. Hence, if applications were no longer being accepted, it logically follows that upgrades could not be obtained either.
47 In reply for the applicant it is submitted the second respondent's statement that the first respondent "did not accept any orders after 25 January 2001" is inconsistent with his claim the computers were given to applicants. Furthermore, it is still possible to advertise for goods and services without actually supplying them.
48 I consider the applicant's case is correct when it submits that advertising may occur independently of supply. These contentions do not raise a reasonable doubt. They will, however, be circumstances relevant to sentencing.
Scope of orders
49 Then the defence case contends that the orders of von Doussa J did not prescribe a particular method of compliance and so were unclear. Specifically, it is said the orders did not require that the respondent post any statements or make any other alterations to the web page: cf Australian Competition & Consumer Commission v Hughes [2001] FCA 38 at par [3].
50 I agree with submission in reply for the applicant that there was no requirement that von Doussa J prescribe the manner in which the required result was to be achieved. It is not the case his orders as formulated were not clear. They specified the respondent was to carry out a particular course of conduct, namely one that was restrained "from advertising, continuing to advertise and/or accepting orders for computers and/or upgrades to computer systems".
Impossibility of immediate compliance
51 The defence argument then contends that when notice of the orders of von Doussa J was received on behalf of the first respondent it was late on a Thursday afternoon, prior to an Australia Day long weekend holiday. It was therefore impossible for the website to be amended until Monday, 29 January as the second respondent was not a person conversant with design and maintenance of a web page and would have had to rely on an expert to do this.
52 I agree with the submissions for the applicant that these matters were not the subject of evidence and were not raised by affidavit or viva voce evidence. They cannot therefore assist the first respondent.
53 However, this Court may take judicial notice of the fact that the public record establishes the Australia Day long weekend occurred on 26 - 28 January 2001. That is evidence arguably relevant to penalty, not to liability.
Non-comprehension of relevance of website
54 The next argument in defence as put by the second respondent for the first respondent is that no conscious decision was made that the web page was not advertising. Rather the maintenance of the web page did not even "enter his thoughts" as a possible breach of the order by the first respondent. It was not until Monday, 29 January when he was advised by the ACCC that it considered the web page to be advertising and hence a breach of the order, that it had occurred to him it was an issue.
55 The submissions for the applicant contend this is inconsistent with the second respondent's assertions in his evidence and his answers to interrogations on behalf of the first respondent. It is said he there accepted the primary, if not the entire, responsibility for the content of the website.
56 I do not find cross-examination relied upon in support as focussed as it would need to be to sustain a finding to the effect submitted for the applicant.
57 However, for reasons stated, subjective intent to deliberately disobey an order of the court is not a necessary element for a charge of contempt to be made out. Even if the fact of intention could be found as contended for by the second respondent, it would not assist the first respondent on the issue of liability. (The applicant's case accepts it is a factor relevant to the seriousness of any contempt). It also assumes the second respondent to be the directing mind and will of the first respondent at the relevant dates, a matter he disputes.
Absence of authority to disable website
58 The second respondent contended he resigned as a director of the first respondent in late December 2000 and subsequently from the respondent "as a whole" from 1 January 2000 so that thereafter he acted "as a caretaker only" pending the anticipated return of a Mr Williamson to Perth around February 2001. He submitted he was not therefore able to make a decision as important as disabling the first respondent's web page.
59 The applicant submits the second respondent has regularly referred to himself as an officer of the first respondent. In his affidavit dated 13 February 2001, the second respondent refers to himself as "General Manager". In his answers to interrogatories dated 16 May 2001 and affidavit sworn on 14 June 2001, he refers to himself as non-shareholding director. The applicant submits that he was at all times, by admission, a caretaker or had assumed responsibility for the running of the first respondent.
60 In my view the evidence read as a whole supports a finding that the second respondent was, at the relevant dates, a person who had assumed responsibility for the running of the first respondent. Nevertheless he contends that did not give him authority to disable the website, as distinguished from amend it. He admits in submissions to being "50% involved in the decision not to disable the website" although he claims to being an agent acting on behalf of Mr Williamson. He asserted, without evidentiary support in the defence case, that a decision to disable the website could only have been made by either Mr Williamson, a Mr Tim Rae or a Mr David Kendrick of Berkeley International.
61 Even if the second respondent's assertions on his lack of power to disable the website were to be accepted, I cannot see how they assist the defence of the first respondent to the charge. It is not the second respondent who is charged; it is the first respondent. The first respondent's clear duty was to see to it that those by whom it acted were aware of its obligations pursuant to the orders of the Court: Windsurfing International Inc v Sailboards Australia Pty Ltd (1986) 19 FCR 110 at 117.
Compliance with orders
62 The defence case also refers to the history of negotiations between the applicant and the second respondent on behalf of the first respondent culminating in his placing a notice on the site following an agreement being reached to that effect on 31 January 2001. Additionally, the word "pending" appeared on an attachment to the application forms. Therefore it is submitted the alleged breach had been rectified in complete satisfaction of the applicant at the date of filing of the motion for contempt.
63 These submissions may be relevant to penalty but are not of assistance to the first respondent in respect of liability between the date of the order and the cessation of the alleged contumelious conduct.
64 It is also contended for the first respondent that a reasonable amount of time should have been given to enable compliance with the order of the Court. The orders speak for themselves in their terms. The absence of notice may be a factor relevant to sentence; it cannot excuse liability if that is established beyond reasonable doubt.
Finding
65 I therefore consider the case brought by the applicant in respect of the first alleged contempt negates the explanations raised on behalf of the first respondent by the second respondent and is established beyond a reasonable doubt.
CONTEMPT MOTION OF 7 MAY 2001 IN RESPECT OF THE [FIRST AND] SECOND RESPONDENTS ("second contempt")
Statement of charge
66 The statement of charge for the second contempt motion reads as follows:
"1. On 24 January 2001, Justice von Doussa made orders in the within proceedings including, inter alia, that:The [First] Respondent its servants, agents or otherwise be restrained from making any withdrawals from any account held with any financial institution other than for expenses incurred by it in the ordinary course of its business to a limit of $5,000 and from making cash withdrawals or cheques payable to cash or any payments to its directors or to any associated entities of the [First] Respondent from the date of service of this order until 31 January 2001 at 5.00pm WST in the afternoon.
2. The order referred to in paragraph 1 above, was personally served on the registered office of the First Respondent on 25 January 2001.
3. On 31 January 2001, Justice Nicholson made orders in the within proceedings including, inter alia, that:
The [First] Respondent by its servants, agents or otherwise be restrained from making any withdrawals from any account held with any financial institution other than for expenses incurred by it in the ordinary course of its business to a limit of $5,000 and from making cash withdrawals or cheques payable to cash or any payments to its directors or to any associated entities of the [First] Respondent from the date of service of this order until 8 February 2001 at 5.00pm WST in the afternoon.
4. The order referred to in paragraph 3 above, was served on the solicitors for the First Respondent and by facsimile on the registered office of the First Respondent, both on 5 February 2001.
5. On 8 February 2001, Justice Nicholson made orders in the within proceedings including, inter alia, that :
The [First] Respondent by its servants, agents or otherwise be restrained from making any withdrawals from any account held with any financial institution other than for expenses incurred by it in the ordinary course of its business to a limit of $5,000 and from making cash withdrawals or cheques payable to cash or any payments to its directors or to any associated entities of the [First] Respondent from the date of making this order until 15 February 2001 at 5.00pm WST in the afternoon.
6. The order referred to in paragraph 5 above, was served on the solicitors for the First Respondent on 9 February 2001 and was posted to the Second Respondent's residence on 9 February 2001.
7. On 15 February 2001, Justice Nicholson made orders in the within proceedings including, inter alia, that:
The [First] Respondent by its servants, agents or otherwise be restrained from making any withdrawals or transfers from the Commonwealth Bank account in its name (numbered 6153 1024 3033).
8. The order referred to in paragraph 7 above, was posted to the Second Respondent's residence on 16 February 2001.
9. In breach of the above orders the First Respondent made a number of cash withdrawals from the First Respondent's account numbered 6153 1024 3033 at the Commonwealth Bank of Australia by taking a proportion of wages paid to staff of the First Respondent in cash.
10. The Second Respondent made, arranged and received the said withdrawals.
11. Further or alternatively to paragraph 10, such payments were, in breach of the said orders, payments to the Second Respondent who was at all material times a director of the First Respondent."
The orders referred to in pars 1, 3, 5 and 7 are referred to as "the orders".
Nature of the liability alleged
67 As against the first respondent, liability for breach of the orders is said to arise from the second respondent acting in the course of his employment (albeit, possibly in dereliction of duty). The orders also relate to the first respondent having acted through an agent "or otherwise".
68 As against the second respondent, liability is said to arise either independently or accessorily. Such liability can arise where the person concerned has notice of the relevant orders and yet engages in acts amounting to a breach even though the orders were not directed to that person. The former concept involves conduct knowingly interfering with the administration of justice by causing the order of the Court to be thwarted: Z Ltd v A - Z and AA - LL [1982] 1 QB 558 at 578; Windsurfing International Inc at 125. The latter concept involves such conduct which aids and abets the breach.
69 For the second respondent it is argued that he is placed in a position of double jeopardy, being charged as liable as a servant, agent "or otherwise" acting on behalf of the first respondent and as the second respondent in his own right. This is a misapprehension. The second respondent faces no charge of liability in the former case. Rather it is alleged that his actions in the manner alleged determine the liability of the first respondent.
70 The second respondent also contends all the staff of the first respondent were arguably acting as servants, agents or otherwise on behalf of the first respondent. He considers they should all have been charged with aiding and abetting. This cannot assist the second respondent. It is for the prosecutor to determine against whom charges are brought.
Non-appearance of first respondent
71 At trial, application was made by the second respondent for leave to represent the first respondent in relation to the second contempt. Leave was refused on the grounds that there was evidence that the second respondent could be found to have been in a position of conflict with the first respondent and no additional evidentiary material was tendered on behalf of the second respondent.
72 The non-representation of the first respondent at the hearing does not provide any reason why the charge cannot be determined against it. The requirement in s 635 of the Criminal Code (WA) that a trial must take place in the presence of an accused person applies to trials on indictment before a jury. Contempts, however, may be dealt with summarily: James v Robinson [1963] HCA 32; (1963) 109 CLR 593; John Fairfax & Sons Pty Ltd v McRae [1955] HCA 12; (1955) 93 CLR 351; Criminal Code (WA) s 7. Criminal procedure (as distinguished from the criminal standard of proof) does not apply to charges of contempt: Witham v Holloway [1995] HCA 3; (1995) 183 CLR 525 at 534. Cf Judiciary Act 1903 (Cth) s 79.
73 The submissions filed by the second respondent have been received and considered by the Court as submissions on his part alone and not on behalf of the first respondent. The Court does not accept the submission by the second respondent that he must defend the first respondent given that pars 10 and 11 of the statement of charge for the second contempt relating to the second respondent must be read in conjunction with par 9 of that charge. That appears to be the double jeopardy argument in another guise.
Evidence
Witnesses
74 For the applicant reliance was placed upon the affidavits of Sarah Louise Kingdon, who commenced employment with the first respondent in the first week of November 2000; the affidavits of Robin Edward Mascall, who also commenced employment with the first respondent in the first week of November 2000; the affidavit of Jeannie Mary Dimov, who carried out a company search in respect of the first respondent on 9 February 2001; the oral evidence of Debra Gay Rowcroft, who commenced employment with the first respondent in early October 2000 and an affidavit of Tania Nicole Murray, project officer with the applicant.
75 For the second respondent reliance was placed on evidence from Fiona Ferguson Barr, compliance officer for the Commonwealth Bank of Australia; Carolyn Gaye Corteen, an employee of the first respondent from October 2000; an affidavit of the second respondent and evidence of Susan Jane Green, an officer of the Commonwealth Bank of Australia, Belmont branch.
Evidentiary issues
76 The second respondent claims that M/s Kingdon gave preconceived evidence which should result in her being declared to be a hostile witness. Although signalling this possibility during the course of her cross-examination, no such application was put to her or made at trial. It cannot now arise.
77 Then the second respondent submits that her credibility should not be accepted and asks that her affidavit and oral evidence be "struck out". He bases this on a submission that her recollection of events was clearly confused and unreliable such that she should be found to have lied to the Court.
78 In her first affidavit M/s Kingdon testified that she was paid, in cash, on a fortnightly basis an amount of $753.85, being the equivalent to $25,000 gross per annum. She further stated that in or about the final week of December 2000 the second respondent called a staff meeting of the employees of the first respondent; told them that the Court had ordered the company could not make payments to the directors; and said that in the future employees would be paid their wages on a monthly basis. She said that on or about 5 January 2001 the second respondent gave her a cheque, instead of her usual pay, for an amount of approximately $1507.00. The cheque was made out in her name with the word "wages" in brackets. She was told by him to put half of the amount in her account for wages and return the other half to him in cash. She had previously been told by the second respondent that the Commonwealth Bank had his signature on file and it would be easy to have the cheque cashed there, which she did. She then repaid the amount of $753.85 in cash to the second respondent. She gave similar evidence in respect of a payment on or about 17 January 2001 in relation to the period in or about the last of January 2001. She said the second respondent began paying her by cheque on a weekly basis for various amounts and on each occasion would tell her how much he wanted to return in cash, which she did. This continued until she ceased employment with the first respondent on or about 14 February 2001.
79 In her second affidavit M/s Kingdon testified as to a cheque of approximately $1500.00 from the second respondent on or about 29 January 2001 in respect of which she was allowed to keep the amount of $1001.00, but otherwise which was dealt with in the same way.
80 The claim of unreliability was based firstly on cross-examination disclosing that notes taken by M/s Kingdon recording amounts she was permitted to keep had not been made, as she had initially claimed, on each occasion and on contradiction in her answers as to whether what she recorded was what she paid back or received or both. Similarly, reliance was placed on equivocation in her evidence concerning the date of the staff meeting which she claimed to have taken place at the end of December. Furthermore, when asked to locate the cheque of 5 January 2001 upon the statement of the first respondent's bank account, she was unable to do so.
81 I agree with the submission for the applicant that none of these matters suggest the unreliability of M/s Kingdon's evidence that she received in cash a proportion of the wages cheques paid to her. Furthermore, the second respondent's submissions admit and seek to rely upon the receipt by him of "cash back". There is, therefore, no proper basis on which to make an adverse credibility finding against M/s Kingdon or to "strike out" her affidavit and oral evidence.
82 It is also to be noted that there was a remarkable consistency between the evidence of M/s Kingdon, Mr Mascall and M/s Rowcroft that a meeting was held prior to Christmas 2000 by the second respondent to advise staff that the court had ordered that the first respondent could not make payment to directors. The date of the meeting is not the central significance of the evidence; rather it is that the statements were made to staff. Furthermore, the same three witnesses said that the second respondent told them to cash their cheques at a particular branch and that evidence was not challenged by the second respondent. The matters raised by the second respondent do not challenge these core aspects of the case.
83 Turning to the evidence of Mr Mascall, the second respondent again asked the Court to find the evidence unreliable and to have the affidavits and oral evidence "struck out". He makes submissions of a kind similar to those made in relation to the evidence of M/s Kingdon, addressing peripheral details but not matters which go to challenging the essential central facts. He relied on matters concerning the timing of the closure of the office; uncertainty as to the amount of wages retained; his evidence as to the date of the corporate meeting being in the last week of December 2000; his inability to locate a cheque on the statements of the first respondent; his location of two cheques on those statements which were not shown to be wages cheques. He relied also on different accounts of a phone call between himself and Mr Mascall given by Mr Mascall on the one hand and M/s Corteen on the other. Finally, reliance was placed on Mr Mascall's evidence in relation to one particular wages cheque. These matters are peripheral to Mr Mascall's evidence on the central issues. In my view they do not lead to a position where his evidence should be regarded as unreliable as a whole.
Case for the applicant
"Cash withdrawals"
84 The case brought against the first and second respondents is that on numerous occasions, subsequently to the making of the orders, the second respondent in respect of the second contempt (a) drew cheques for employees of the first respondent on the first respondent's account ostensibly for "wages" but which were in excess of the actual wages of the employees; (b) recovered from each such employee a proportion of such cheques after they had been cashed at the first respondent's bank. I accept the contention that the second respondent admits each of those occurrences.
85 The second respondent also admitted that he considered himself to be authorised by the first respondent to write such cheques. It is submitted for the applicant that therefore those actions were the actions of both the first and second respondents. (The capacity in which the second respondent so acted will be further considered below in relation to his defence).
86 The case against the second respondent continues with the submission that it is clear the result of the above-described arrangement was to realise a quantity of the first respondent's funds in cash. The first and second respondents made a cash withdrawal, it is said, regardless of the use to which the approximately $14,000 cash so received was put and regardless of the number or nature of the stages involved in the transaction.
87 It is further submitted for the applicant that the arrangement was a "cash withdrawal" within the terms of the orders.
88 It is further submitted for the applicant that it is open to the Court to conclude beyond reasonable doubt that (a) the second respondent specifically directed staff of the first respondent to cash their wages cheques at a particular branch; (b) the first or second respondent could have written cheques for many of the expenses said to have been paid in cash; and (c) the arrangement was specifically designed to circumvent the restriction on "cash withdrawals" and to cover-up the cash withdrawal. In my view neither element (b) or (c) is a necessary element to establish a breach of the orders. The specific intent to breach referred to in (c) is not necessary to establish a contempt: see the authorities earlier cited.
89 It is then submitted for the applicant that the Court should read the description "cash withdrawals" appearing in the orders purposively. It is said that in making the orders it was the intention of the Court to reduce the risk of dissipation of the first respondent's funds, once satisfied of a risk in that connection. It is said that the relative ease with which cash may be disposed of and the difficulties of following the trail of cash dispositions lead to prohibitions on "cash withdrawals" frequently being sought as preservative measures. It is suggested that the inability of the second respondent to satisfactorily account for the cash he received illustrates precisely the mischief to which the Court's orders were directed.
90 It is then submitted that the Court should conclude that the first and second respondents failed to comply with the orders. It is suggested that the arrangement involving the cash withdrawals was one designed to provide a veneer of propriety to what in fact was a circumvention of the orders by the making of such withdrawals.
"Payments to its directors"
91 The orders also applied in respect of payments to the directors of the first respondent. For the applicant it is submitted that as the second respondent admitted receipt of cash in the manner previously described, there was a "payment to" a director within the meaning of the orders.
92 The submissions in support of that proposition run as follows.
93 The term "director" is defined in s 9 of the Corporations Act 2001 (Cth) ("Corporations Law"). It is clear that a person can be a "director" regardless of the title that is given to the position and regardless of the validity of the "appointment": Re Richborough Furniture Ltd [1996] BCLC 507; McCarthy v Wheeler (Hedigan J, 16 September 1998, unreported); Deputy Commissioner of Taxation v Austin (1998) 28 ACSR 565; 16 ACLC 1555.
94 The applicant concedes that the second respondent notified Australian Securities and Investments Commission ("ASIC") that he ceased to hold office as a director from 13 January 2001. The second respondent admits to inserting this date on the ASIC document entitled "Notification of change of officeholders" as the date he ceased as a director. He also dated the document 16 January 2001. The 13th of January 2001, was not the date on which the second respondent claims to have resigned as director. The significance of this date was not explained by the second respondent. It does not correspond with any contemporaneous events except the date on which the second respondent re-commenced writing cheques. The second respondent admits that on 12 January 2001, he contacted the Belmont branch of the Commonwealth Bank and advised them that he was to be re-instated as a signatory on the first respondent's account, and that he commenced writing cheques from that point in time. The applicant submits that the second respondent inserted 13 January 2001 on the "Notification of change of officeholders" at a later date, to create the appearance of disassociation with the first respondent when in fact, at the corresponding time he was starting to write cheques and was acting as a director. The date of the document, 16 January 2001, was a date selected by the second respondent (as opposed to the actual signatory - Mr Williamson) to lend credence to the (false) date of resignation.
95 In any event, the following matters are advanced on behalf of the applicant as suggesting that the second respondent was a de facto director of the first respondent at the material time:
(a) There are numerous examples of the second respondent acting as the company in relation to matters of great importance to the company:
(i) He entered negotiations on behalf of the first respondent in respect to the financial package and was, at times, in daily contact with the first respondent's financial manager, David Kendrick of Berkeley International Pty Ltd;
(ii) He instructed solicitors on behalf of the first respondent;
(iii) He had discussions with the solicitor for the first respondent regarding the financial viability of the first respondent;
(b) The second respondent was considered by employees to have the day-to-day running of the first respondent.
(c) There are other activities of the second respondent that suggest this directorship:
(i) He was responsible for changing the content of the first respondent's website;
(ii) He has maintained the first respondent's website since the first respondent closed the business;
(iii) He personally paid the monthly fee on the first respondent's website;
(iv) He personally pays the monthly bill for the storage of the first respondent's office contents;
(v) He paid for company expenses on his personal credit card;
(vi) He paid some of the first respondent's business expenses out of his own personal funds;
(vii) He was responsible for keeping records of the wages paid to employees of the first respondent.
(d) The second respondent has represented that he is a "Non-shareholding director" in:
(i) His answers to interrogatories dated 16 May 2001 and Exhibit 11, introduction;
(ii) Four affidavits sworn on 4 May 2001 and filed in the Supreme Court;
(iii) An affidavit sworn on 29 June 2001 and filed in the Supreme Court.
Defence case for the second respondent
96 In respect of the submissions for the second respondent, the Court disregards the matters asserted in those submissions which were not the subject of evidence and which are particularised in par 6 of the submission for the applicant in reply.
Procedural fairness
97 Presence at bank: In his submissions the second respondent states he believed he was defending himself against an allegation arising from the statement of charge that he went to the bank, made cash withdrawals and kept some funds for himself. The case he faced is that previously set out under the heading "Cash withdrawals", namely that he drew cheques for employees of the first respondent on the first respondent's account and recovered from each such employee a proportion of such cheques after they had been cashed. The difference between the charges pressed and the charges said to be believed by the second respondent is that no case was brought against him that he "made, arranged and received" the cash withdrawals.
98 The submissions for the applicant in reply challenge the sustenance of the belief in the face of what the second respondent knew of the case against him and also assert that the second respondent was not prejudiced in the presentation of his defence.
99 In relation to the foundations of the second respondent's belief, it is clear from examination of the opening that it was stated by counsel for the applicant that the allegation which it made was that a number of payments were made to employees of the first respondent by cheque and the employees were instructed to take the cheque to the Commonwealth Bank, cash it and then a part of the proceeds were handed to the second respondent. It was that allegation which was pressed in opening as the alleged contempt in breach of the orders referred to in the statement of charge.
100 The next question is whether the statement of charge specified the contempt of which the second respondent was alleged to be guilty in the requisite manner previously set out. That requires the application of a test as to "whether the gist or substance of [the alleged contumelious] conduct has been sufficiently conveyed in the Statement of Charge to enable the alleged contemnor to meet the charge": CFMEU at par 119 per Merkel J. This requires examination of whether the charge has been made "sufficiently explicit" (Coward at 579 - 580), even though it is not always necessary to formulate the charge in a series of specific allegations: Chang Hang Kiu v Piggott [1909] AC 312 at 315, considered in Coward at 579 - 580 and discussed in CFMEU.
101 It is necessary to turn to pars 9, 10 and 11 of the statement of charge. It is clear that par 10 in its context can be read and understood as follows:
"10. The second respondent made, arranged and received a number of cash withdrawals from the first respondent' s account numbered 6153 1024 3033 at the Commonwealth Bank of Australia by taking a proportion of wages paid to staff of the first respondent in cash."
The case that was brought was not one that the second respondent himself had "made" such withdrawals by going to the bank. The case brought was one that the second respondent had written appropriate cheques and (on the case as stated in opening) instructed the payee to take the cheque to the Commonwealth Bank and cash it. In my opinion such facts, if established to the requisite standard, are within the meaning of both "make" and/or "arrange". The word "made" takes its meaning from "make". The latter includes meanings of "to produce by any action or causative agency"; "cause to be or become"; and "to give rise to; occasion": The Macquarie Dictionary 2nd ed. 1991 p 1074; cf The New Shorter Oxford English Dictionary (Clarendon Press, Oxford, 1993) at p 1671 - 2. The case that was brought against the second respondent was also that he had "received" part of such withdrawals from the payees. The allegation of partial receipt falls within the scope of the receipt referred to in par 10 of the statement of charge.
102 Therefore, notwithstanding that no allegation was pressed that the second respondent had himself made cash withdrawals, I am of the opinion that the gist or substance of the conduct alleged to be in contempt was sufficiently conveyed in the statement of charge to enable the alleged contemnor to meet the charge. Given the statement in the opening of the applicant there was no basis for continuation of the second respondent's belief to the contrary after that point in time. I reach this view without reliance upon the affidavit evidence in which the case for the applicant is said to have been outlined.
103 De facto directorship: The contentions by the second respondent then continue by focussing upon par 11 of the statement of charge. His submissions maintain that the statement did not refer to what he describes as "a de facto director arrangement" as described in the applicant's submission. The second respondent contends that because of that, he was not aware he would be expected to "defend his actions" and explain to the Court what his actual functions were after his formal resignation as a director of the first respondent. He submits that unless or until an application is allowed to alter a particularised statement of charge, the accused is entitled to insist that he or she if only required to meet the charges made: CFMEU at par [32].
104 The statement of charge bringing the second alleged contempt was not a particularised statement of charge. Nevertheless it was, in accordance with authorities previously cited, required to distinctly state the charge so that it could be met. In my view there is no question that it did so. It alleged the second respondent "was at all material times a director of the first respondent". The word "director" must take its colour from the law. If the applicant is right that the actions of the second respondent were such as to constitute him a director of the first respondent at law, then that lies within the charge. It was not for the second respondent to come to the Court with his own preconception of what the word "director" conveyed. It was intended to convey and did convey all that can be encompassed within the word according to law.
105 Choice of competing inferences: It was also contended by the second respondent that the statement of charge and its use of the words "further or alternatively" in par 11 gives the Court a choice as to the charge against him and so cannot satisfy the standard proof beyond reasonable doubt because it presents the Court with a choice between competing inferences: Re Bramblevale Ltd [1970] 1 Ch 128 at 137. This is not the case; the Court is not presented with competing factual inferences. Rather, the Court is offered a number of ways, as a matter of construction, as to how the contempt may have been committed. The line of proof to the requisite standard is capable of being proved through any alternative provided that standard is not considered to be satisfied within any such alternative by reference to a choice between competing inferences (the criminal standard of proof always requiring that the person charged be given the benefit of the most favourable inference of the competing inferences).
106 Payment of wages in cash: The second respondent also contended for a construction of par 9 of the statement of charge whereby it is to be understood as charging that the wages were paid to staff of the first respondent in cash. However, par 9 was pressed as a charge of the taking of a proportion of wages (being the wages paid the staff of the first respondent) in cash. That is, as pressed the description "in cash" relates to the "taking" rather than to the "wages". It was this which was relied upon implicitly in the terms of the opening for the applicant. In my view that construction was clearly open so that the statement of charge as pressed sufficiently specified the contempt in the terms in which the charge was pressed.
"Cash back" purposive argument
107 The submissions for the second respondent next contend that he received "cash back" not to circumvent the order but to comply with it. He contends that knowing there was a prohibition in the orders on the making of cheques payable to cash, he arranged the payment of cheques, as the evidence disclosed, to staff with cash coming back to him to fund the first respondent.
108 One issue here is whether it is established beyond reasonable doubt that the second respondent made, arranged and received the cash withdrawals as described in par 9 of the orders and whether what occurred is properly considered to be a "cash withdrawal". His purpose, if established by the evidence, is irrelevant to that judgment. Purpose, if established, may be a matter for consideration in respect of sentencing if the second contempt is made out to the requisite standard.
109 The other issue is whether he received cash back as a "payment to a director". His purpose in so doing could be relevant to that argument and it is considered below.
Ambiguity in the orders
110 Next, it is submitted by the second respondent that the orders had two possible constructions so that breach of them cannot lead to conviction for contempt because they fail to specify with certainty the result to be achieved: Concrete Constructions Pty Ltd v Plumbers at 72 - 73; ICI Australia Operations Pty Ltd v Trade Practices Commission (1992) 38 FCR 248 at 259; Australian Competition and Consumer Commission v Hughes at par [18]; CFMEU v BHP at p 35, par [100]. The first construction which it is said the orders lent themselves to is that no cash could be withdrawn from the bank account of the first respondent. The second construction which it is said the orders lent themselves to was that cash could be withdrawn from the bank account of the first respondent provided it was used in the ordinary course of business and was not taken by either a cheque made payable to cash or a cash withdrawal (understanding the latter to mean a cash withdrawal from a bank). The second respondent claims to have understood the orders in this second sense (leaving aside whether the evidence establishes that). He further submits that the orders did not state that all expenses were to be paid by cheque, nor that the first respondent could not use cash for expenses.
111 In my opinion the ambiguity relied upon by the second respondent is not present in the terms of the orders. A plain reading of the first three orders shows that they restrained the making of:
(a) any withdrawals from any account held within any financial institution other than for expenses incurred by it in the ordinary course of its business to a limit of $5000; and
(b) any cash withdrawals or cheques payable to cash; or
(c) any payments to its directors or to any associated entities of the first respondent.
The restraint in (b) operated both in its own behalf and necessarily in respect of the restraints in (a) and (c). A cash withdrawal or cheque payable to cash made to satisfy matters within categories (a) or (c) would fall within the prohibition in (b). Consequently, none of the expenses incurred by it in the ordinary course of business were capable of being met by "cheques payable to cash". The resulting effect was that the orders required the first respondent to meet its expenses incurred in the ordinary course of business within the permitted limit by cheques payable to a specific debtor. (The evidence on the nature of the expenses does not support any inference that the orders so understood were impossible to comply with).
112 The second respondent's contention in this respect is therefore untenable. It is not what he claims he understood the orders to mean but what they in fact meant which forms the basis of the consideration of the charge relating to the second contempt.
Cash withdrawal
113 It is submitted for the second respondent that the fact that he did not personally go to the bank precludes the evidence satisfying to the requisite standard the description of "cash withdrawal". The second respondent submits (correctly) that there was evidence that a payee could cash a cheque bearing his or her name on the provision of acceptable identification so that they were not cashed by the second respondent. For reasons previously given in relation to the meaning of the words "made, arranged and received", I do not consider that this precludes the application of par 10 of the statement of charge.
114 It was also submitted for the applicant that the fact that more than one person and more than one step was involved in the transaction leading to the receipt by the second respondent of cash does not mean that there was not a "cash withdrawal". It follows also from the prior examination of the meaning of the words "made, arranged and received" that this submission is correct.
115 Next the second respondent contends that with the exception of Mr Mascall's evidence, the applicant has provided no evidence to show that any of the wages cheques were cashed or whether they were banked into the account of the payee with a portion being subsequently returned in cash to the second respondent. There is evidence that M/s Kingdon and M/s Rowcroft banked the cheques into each of their accounts. However, the charge is brought in terms of breach of the orders which requires application in particular of pars 9 and 10 of the orders in this respect. Although in the applicant's written submissions it was stated that the cash had been recovered by the second respondent from a proportion of the proceeds of such cheques "after they had been cashed at the first respondent's bank", it is no part of the statement of charge that the cheques had to have been cashed at that bank or that they had to have been cashed. What is in issue is whether the second respondent, contrary to the orders, "made, arranged and received" a proportion of wages paid to staff of the first respondent in cash. Whether that occurred as a consequence of the cheques being cashed or being first banked and then funding a cash withdrawal is not to the point provided there is the necessary nexus in the application of pars 9 and 10. Paragraph 10 refers to the making, arranging and receiving by the second respondent in relation to "the said withdrawals". That relates to the "cash withdrawals" referred to in par 9.
116 M/s Barr from the Commonwealth Bank gave the following evidence for the second respondent:
(i) A cheque made payable to a person is NOT a cheque made payable to cash;
(ii) A cheque made payable to a person does not ever become a cheque payable to cash;
(iii) A cheque made payable to a person does not ever become a cash withdrawal;
(iv) A cheque made payable to a person is neither a cash withdrawal nor a cheque made payable to cash;
(v) Even though it is possible to cash a cheque bearing a person's name, with the production of the appropriate identification, it is still not a cash withdrawal;
(vi) A cheque that has been cashed will still appear on a bank statement as a cheque with the appropriate cheque number;
(vii) Inspection of a bank statement will not indicate whether a cheque has been cashed, or processed through the normal banking system;
(viii) A cheque that has been cashed does not appear as a cash withdrawal.
M/s Barr also confirmed that the definition of a cash withdrawal was one that was made either by ATM or an over the counter withdrawal using a withdrawal slip, and not by cheque. However, it is submitted for the applicant that whether or not the arrangement is a "cash withdrawal" in bank parlance is irrelevant. I agree with this submission. The reason is that par 9 of the orders uses the description "cash withdrawals" to refer to the taking by the second respondent of a proportion of wages paid to staff of the first respondent in cash. Paragraph 9 gives its own meaning to the description "cash withdrawals" by relating it to the receipt of the proportion of staff wages in cash.
117 The second respondent also contends there was evidence that cash was spent on expenses of the first respondent after the making of the first of the orders and so was utilised to fund the day to day running expenses of the first respondent's business. However, the case for the applicant is correct when it submits that whether or not a cash withdrawal was made by the first and second respondents and so whether the orders were breached is a matter which falls for judgment regardless of the use to which the cash received by the second respondent (approximately $14,000) was put.
118 The second respondent also raised the explanation that cash given to him by employees of the first respondent was for the purpose of the normal business expenses of the first respondent. That submission is irrelevant if such cash was in any event paid to him in breach of the orders. For the applicant it is submitted the evidence does not support the claim that such cash was utilised in the ordinary course of the business of the first respondent. There is evidence that the second respondent advised M/s Kingdon and Mr Mascall that the cash back arrangement was to enable him to survive (although I accept the submission by the second respondent there is a surprising identicality in this evidence). He only partly challenged M/s Kingdon's evidence on this point and did not challenge Mr Mascall's evidence. M/s Corteen gave evidence that she gave money to the second respondent but had no idea what he did with it. In cross-examination it was only put to the second respondent that he used some of the money from staff to put into his own pocket, which he denied. No evidence was adduced concerning actual application of money received by him from staff. In these circumstances I do not consider the second respondent's explanation is negated. However, that does not appear to me to assist him on the issue of liability although it is a factor to take into account in sentencing. Nor does it mean there was no breach of the orders because the orders permitted use of certain funds in the ordinary course of business of the first respondent. That is because the orders did not permit case withdrawals for any purpose and limited such funds to $5,000.
119 Likewise, the second respondent's evidence that some of the cash received was given by the staff of the first respondent to the second respondent as a loan to the first respondent was negated by the evidence and by later contradiction of the second respondent himself.
Making or arranging by second respondent
120 The second respondent denies there is evidence which establishes he specifically directed staff to cash their wages at a particular branch.
121 I do not consider it is established beyond a reasonable doubt that the second respondent "specifically directed" staff of the first respondent to cash their wages cheques at a particular branch. M/s Kingdon's evidence was she had been told by the second respondent that his signature was on file at the Commonwealth Bank (St George's Terrace) and it would be easy to get the cheque cashed there because of that. Mr Mascall's evidence was that he had been told to go to that Bank and branch and get the cheque cashed. M/s Rowcroft's evidence accorded with that of M/s Kingdon.
122 It was also submitted for the applicant that the second respondent did not cross the wages cheques "not negotiable" as he intended the staff to cash the cheques. In my view the evidence establishes beyond a reasonable doubt that the usual practice of the second respondent was generally not to cross cheques "not negotiable". However, the evidence does not go so far as to establish the intention contended for. Nor do I think it is open to inference from the evidence, given the generality of his practice.
123 However, neither of the two preceding points is in my view material to the question whether the second respondent played a causative role in "making" or "arranging" the cash withdrawals by taking a proportion of wages paid to staff in cash. The reason is that the same evidence establishes that the second respondent told the staff members to repay him a certain amount in cash. It is established beyond reasonable doubt that the only reason the staff members paid to the second respondent in cash a proportion of wages received by them was because of his direction to do so.
Whether second respondent acted as servant, agent or otherwise for first respondent
124 In a letter to the Commonwealth Bank Belmont signed by Mr Williamson and Mr Tim Rae on behalf of the first respondent notice was given that the second respondent would no longer be employed by the first respondent from 31 December 2000. (The same letter confirmed the second respondent's removal as an authorised signatory for the first respondent).
125 The second respondent claims he was not employed by the first respondent from 28 December 2000. He claims after that date to have been acting in a caretaker role only, acting under instructions from the first respondent and receiving no remuneration. The case for the second respondent asserts that he was at the material time acting as a caretaker carrying out the wishes of Messrs Williamson and Kendrick. He maintains that was the position after 27 December 2000 when advice was received by the Commonwealth Bank that the second respondent was no longer employed by the first respondent.
126 In cross-examination the second respondent's evidence was that in January and February he was in contact with the first respondent's financial managers in connection with a package to rescue the company. This occurred on a daily basis. It put him in contact with Mr Kendrick of Barclay International Ltd.
127 In my opinion the applicant's case does not negate this explanation beyond reasonable doubt. Rather that case relies on the contention that the second respondent acted as a director of the first respondent (a matter considered below). I do not consider it is established the second respondent was at the material time a servant as an employee of the applicant.
128 On his own evidence, however, the second respondent acted on the instructions of directors of the first respondent. He was therefore an agent for it or otherwise acting on its behalf.
Whether second respondent received payments as a director or acting director of first respondent
129 The word "director" for the purposes of the Corporations Law is defined in s 9 as follows:
"director of a company or other body means:(a) a person who:
(i) is appointed to the position of a director; or
(ii) is appointed to the position of an alternate director and is acting in that capacity;
regardless of the name that is given to their position; and
(b) unless the contrary intention appears, a person who is not validly appointed as a director if:
(i) they act in the position of a director; or
(ii) the directors of the company or body are accustomed to act in accordance with the person's instructions or wishes.
Subparagraph (b)(ii) does not apply merely because the directors act on advice given by the person in the proper performance of functions attaching to the person's professional capacity, or the person's business relationship with the directors or the company or body."
The relevant paragraph for the present charge is that contained in (b)(i).
130 In Natcomp Technology Australia Pty Ltd v Graiche (2001) 19 ACLC 1117 at 1119. Stein JA relied upon the decision of Madgwick J in Deputy Commissioner of Taxation v Austin (1998) 16 ACLC 1555; (1998) 28 ACSR 565 where he discussed the conduct and circumstances which may be considered when determining whether a person's actions fall within the definition of director which then appeared in s 60(1)(a) or (b) of the Corporations Law. That included a provision that a "director" included a reference to "a person occupying or acting in the position of a director of the body, by whatever name called and whether or not validly appointed to occupy, or duly authorised to act in, the position". Those words do not seem to me to raise issues materially different to those in the above cited present definitions. The reasons of Stein JA was the subject of agreement from Spigelman CJ and Heydon JJA.
131 In Austin's case as cited in Natcomp, Madgwick J said:
"Thus it seems to be a necessary condition of acting as a director, whether properly appointed or not, that one exercises what might be called the actual (and statutorily extended) top level of management functions. However, that is not necessarily a sufficient condition for such a conclusion, nor is it the same as saying that one must do things which only a director can do.If, in the case of a small company, a person has, with full discretion, "acted as the company" in relation to matters of great importance to the company, and other than as an arms' length expert engaged for a limited purpose, the conclusion that that person has acted in the capacity of a director may well be justified. The extent to which and the circumstances in which the person has so acted will nevertheless be of importance.
The variety of commercial and corporate life is such that it seems to me unprofitable to attempt a general statement as to what is meant by "acting as a director". Whether a person does so act will often be a question of degree, and requires a consideration of the duties performed by that person in the context of the operations and circumstances of the particular company concerned. I have, for example, referred to the circumstance of the size of the company. In a large and diversified company, great discretion to deal with very important matters must be reposed in employees. In the case of a supermarket chain... it would hardly occur to anyone to suggest that a managerial employee held to have ´acted as the company' in breaking a consumer protection law at a particular store was acting as a director of the vast company concerned. As suggested above, in the case of a single person making decisions for a company the business of which was confined to the operation of a corner store, a different view might be taken...
Another relevant factor may be how the person who is claimed to have acted as a director was reasonably perceived by outsiders who deal with the company. This may aid a conclusion that the supposed director has held himself or herself out as such. Express holding-out was treated as a relevant factor in the Re Valleys case [Re Valleys Rugby League Football Club Ltd [1997] 2 Qd R 645] and, with respect, this appears obviously correct. However, an express claim to be a director may, in some cases, be carefully not made. That would not prevent a conclusion, nevertheless, that a person's dealings with third parties point to his or her having acted as a director. [at ACLC 1,559; ACSR 570]"
132 Turning to the applicant's case on the factors said to have made the second respondent a de facto director (as previously set out in par [88]), the following matters arise.
Re (a)(i): Examination of the evidence establishes beyond a reasonable doubt only that the second respondent was in contact with Mr Kendrick with a view to being informed concerning development of a financial package being investigated through Mr Williamson and Mr Timothy Rae.
Re (a)(ii) It is established beyond a reasonable doubt that the second respondent conveyed instructions on and before 29 December 2000 to the solicitors on behalf of the first respondent. It was found in reasons delivered on 14 August 2001 by White J in Patrick Walker that an affidavit sworn by the second respondent, apparently on 18 February 2001 and filed in the Federal Court, disclosed that he was then acting for the first respondent in giving instructions to the first respondent's solicitors in connection with the proceedings in the Federal Court. The second respondent maintained that the instructions given to the solicitors by him were at the express request and under the authority of Mr Williamson and Mr Kendrick. He did not bring evidence to support that contention. It is negated by the evidence relied on for the applicant.
Re (a)(iii): The second respondent accepts that he had discussions with the solicitor for the first respondent concerning the financial viability of the first respondent. However he contends that occurred in early December 2000 when he was still a director of the first respondent and that, consistently with his evidence elsewhere, occurred under the instructions of Mr Williamson and Mr Kendrick.
Re (b): M/s Kingdon and Mr Mascall's evidence was that the second respondent appeared to them to be responsible for the day to day operation of the business of the first respondent. The second respondent raises the issue of what it was these witnesses comprehended by the description "the day to day running of the business". That is not explained by the applicant's case. Likewise the second respondent raises in defence the issue that even if he was involved in the day to day running of the business, he was not involved in top level management functions. That is un-negated but is not necessarily decisive. The second respondent's case is that from January onwards he basically had the role of de facto office manager and the question is whether that is negated.
Re (c)(i) and (ii): The evidence establishes and the second respondent accepts that he was responsible for change in the content of the first respondent's website and has maintained it since the first respondent's closure of business.
Re (c)(iii): The evidence establishes that the second respondent paid the monthly fee on the first respondent's website.
Re (c)(iv): The evidence establishes that the second respondent paid the monthly bill for storage of the first respondent's office contents.
Re (c)(v): The evidence establishes that the second respondent paid for company expenses on his personal credit card from August 2000 to early January 2001.
Re (c)(vi): It is established that the second respondent paid some of the first respondent's business expenses out of his own personal funds but not at the material dates.
Re (c)(vii): The evidence establishes that the second respondent maintained records of wages paid to employees of the first respondent.
133 I do not consider that the facts as found in relation to the above paragraphs establish beyond a reasonable doubt that the second respondent was acting as a director of the first respondent. The actions are as consistent with the second respondent's explanation given in defence as they are with the applicant's case that he was a director. There remains par (d).
Re (d): Here reliance is placed on the second respondent representing himself as a "non-shareholding director". He did so in his affidavit sworn 1 June 2001 where he deposed:
"2. On December 28th 2000, I effectively resigned from the first respondent, via an email to shareholding Director Mr. Johnson Williamson. This resignation was at Mr. Williamson's request. ...3. This resignation was confirmed by the standard form sent by Mr. Williamson to ASIC dated 16th January 2001. ...
4. On 22nd February, I received notification from ASIC that I could not be removed as Director due to the corporation's law stating that a company must have at least one director who resides in Australia. ..."
Copies of the documents described were annexed.
134 In Patrick Walker, Commissioner of Fair Trading v Info4pc.com Pty Ltd [2001] WASC 212 White J found as follows:
"On or about 16 January 2001, Williamson sent a notice to the Australian Securities & Investments Commission ("ASIC") recording that the second respondent ceased to hold office as a director of the first respondent as from 13 January 2001, a copy of which notice was sent to the second respondent and is annexed to one of his affidavits date 4 May 2001. Subsequently, on 22 February 2001, ASIC wrote to first respondent returning the form on the grounds that it had not been properly completed and pointing out that a proprietary company must have at least one director who resides in Australia.The second respondent may well have believed that he was no longer a director of the first respondent during the period between 16 January and 22 February 2001. The fact is that he was a director during the relevant period."
The finding of White J on the issue of the second respondent being a director cannot have binding effect here as issue estoppel is not applicable in criminal proceedings: Rogers v R [1994] HCA 42; (1994) 181 CLR 251 at 254 per Mason CJ.
135 However, in par 3 of his affidavit immediately above the second respondent sets out he could not be removed as a director in January 2001. This is the foundation of the reasoning of White J. There is therefore no reason why that reasoning should not be equally applicable in this proceeding - not because it has any binding effect but rather because, being evidence in this proceeding, it states the correct legal effect of the circumstances relied upon by the second respondent.
136 I therefore find that at the relevant dates the second respondent was a director of the first respondent.
Finding
137 I therefore consider the case brought on behalf of the applicant in respect of the second alleged contempt negates the explanations raised by the second respondent and is established against the first respondent beyond a reasonable doubt. The charge is made out both in respect of the first respondent acting through the second respondent as agent or otherwise in making cash withdrawals and additionally in making payments to a director, namely the second respondent as a director. The second respondent in these circumstances is also a contemnor in respect of the second contempt on the basis of his accessorial or independent breach of the orders in accordance with the authorities previously referred to.
SENTENCING
138 The Federal Court has a wide range of penalties open to it (Australian Securities Investment Commission v Matthews (1999) 32 ACSR 404 per Sackville J at 411) and includes the power to:
(a) commit a contemnor to prison for an indefinite period of time (Gallagher v Durack [1983] HCA 2; (1983) 152 CLR 238; Flamingo Park Pty Ltd v Dolly Dolly Creation Pty Ltd (1985) 5 FCR 169 at 178 per Wilcox J);
(b) to impose a fine for a wilful breach of an order or undertaking (Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 161 CLR 98 at 109 - 113; Flamingo Park Pty Ltd at 178 per Wilcox J);
(c) to impose a daily fine (Australasian Meat Industry Employees' Union at 113 - 115); and
(d) to order the sequestration of the assets of a contemnor (Australasian Meat Industry Employees' Union at 115 - 116);
(e) to suspend on condition any sentence of imprisonment that it might impose in respect to contempt (Australian Competition & Consumer Commission v Goldstar Corp Pty Ltd (Drummond J, 6 November 1998, unreported); ASIC v Matthews at 411).
139 It is important that the seriousness of a contempt is brought home to the contemnor and that the contemnor realise that their perceptions do not constitute a licence to ignore court orders or legislation directed to the prohibition of deceptive conduct (Hughes at par [24]).
140 In determining what is an appropriate penalty, the intent of the contemnor is important (Attorney-General v Times Newspapers Ltd [1992] 1 AC 191 at 217 - 218; Hughes).
141 A sentence for contempt is punitive, to vindicate the authority of the court (Australasian Meat Industry Employees' Union at 107). The underlying rationale for every exercise of the contempt power was the necessity to uphold and protect the effective administration of justice. Gibbs CJ, Mason, Wilson and Deane JJ said:
"Although the primary purpose in committing a defendant who disobeys an injunction is to enforce the injunction for the benefit of the plaintiff, another purpose is to protect the effective administration of justice by demonstrating that the courts orders will be enforced. As the authors of Borrie and Lowe's Law of Contempt, 2nd ed (1983) say, at p. 3: "if a court lacked the means to enforce its orders, and its orders could be disobeyed with impunity, not only would individual litigants suffer, the whole administration of justice would be brought into disrepute."
142 In Hughes, the respondent breached an interlocutory order of the court by failing to cause a notice to be posted, within 10 days of that date, on an internet site to the effect that oral contraceptives will not be sold or supplied to anyone in Australia. The respondent denied the charge and Tamberlin J found that:
"There has been a deliberate omission which reflects to a large extent an important lack of appreciation of the importance of strict compliance with the orders of the Court. Although I accept that Hughes has generally acted on the basis of a firmly held belief on the evils of population growth, nevertheless he has clearly failed to attach the required degree of priority or importance to an order of the Court."
The contemnor was sentenced to two weeks imprisonment with the warrant to lie in the Registry for 30 days provided that the respondent posted on the internet site the appropriate notice.
Seriousness of the contempt
First contempt
143 In submissions for the first respondent the second respondent again claims he was not a director of the respondent or a "true employee". Nevertheless he says he should be seen as someone who took reasonable steps (on its behalf) to comply with the order. Furthermore, he did not refuse or neglect to make the agreed amendments to the web page once informed of what was required.
144 For the applicant it is submitted that the extent to which the second respondent appreciated that a contempt was being committed is the principal matter by which the seriousness of the contempt by the first respondent is to be adjudged (see for example Hughes at [20]). I accept that submission.
145 Although the second respondent claims (in cross-examination) to have been responsible for the website only to the extent of 50% (having shared, he said, the decision with Mr Williamson), the reliability of his answer may be doubted because no mention of such a shared decision is to be found in his affidavit and no mention of Mr Williamson's involvement in the website is to be found in his answer to an interrogatory about who was responsible for the text appearing on the website. I agree with the submission for the applicant that the second respondent's explanation when confronted with these matters was unconvincing and calculated to divert some attention away from him as the relevant decision-maker. It is noted that he admitted "authorship" in cross-examination.
146 Although the second respondent characterised (in cross-examination) the website "as informative" (in contradistinction to being advertising), the reliability of his answer may again be doubted. When his attention was drawn to photographs of the first respondent's premises appearing on the website, he refused to concede these were intended to have any effect beyond informing the public and that they were designed to instil public confidence. When his attention was drawn to the page headed "Claims Made by NSW Minister", he persistently refused to accept that the commentary was designed to repair or prevent whatever damage might result from statements made by the said minister. These responses were unconvincing. I accept the submission for the applicant that the second respondent's responses were calculated to minimise his role and to cast it in a more benign light.
147 Nevertheless, as the findings of fact made earlier disclose, the website was in contempt only between 25 January 2002 (when the order was served) and 31 January 2001. Three of those days comprised a long weekend. The second respondent's conduct is relevant to judging the seriousness of the first respondent's conduct but not to his personal liability (as none is maintained in respect of him on this contempt).
148 In my opinion the short duration of the breach and the cooperation leading to the placing of the notice on the website place this breach relatively close to the lower end of seriousness, even taking into account the second respondent's attempts to minimise his role.
Second contempt
149 For the applicant it is submitted the matters which bear upon the appropriate sentence are:
(a) the wilful and sustained nature of the contempt;
(b) the second respondent's cynical design to circumvent the Court's orders;
(c) the quantum of funds comprising the contemptuous behaviour and the inability/unwillingness of the second respondent to accurately account for the disposition of the whole of that sum;
(d) the extent to which the second respondent's contempt has frustrated the Court's (preservative) orders and the consequential effect on the first respondent's ability to satisfy any judgment; and
(e) the total absence of contrition.
150 The applicant submits that the seriousness of the second respondent's conduct should be considered to be at the "high" end of the scale and that a term of imprisonment is one of the sentencing options within the appropriate range. The possibility that the second respondent may be unable to pay a substantial fine is said to be a matter which indicates the appropriateness of imprisonment over a fine.
151 As to (c) immediately above, I accept the submission for the second respondent that there was not an inability or unwillingness of the second respondent to accurately account for the disposition of the whole of the sum. I proceed on the basis that the sum received was in the order of $14,000 of which approximately $5,000 was repaid to staff (these latter amounts having been characterised as a type of "loan" to the first respondent, on the second respondent's account). I have accepted above the submission for the second respondent that the applicant's case has not negated his explanation given in defence that the cash withdrawn by him and not repaid to staff was used in the ordinary course of the business of the first respondent.
152 Central to the second respondent's submission on sentencing is the submission that he did not intend to breach the court orders so that his actions were not wilful: par (a) immediately above. He therefore submits there is no basis upon which to find he acted wilfully or contumaciously or in a sustained manner: cf Hinch v Attorney-General [1987] HCA 56; (1987) 164 CLR 15 at 32; Flamingo Park Pty Ltd v Dolly Dolly Creation Pty Ltd (1985) 5 FCR 169 at 180. The second respondent in these submissions misunderstands the effect of the law. In Flamingo at 183 Wilcox J said:
"The decisions, particularly in the light of their endorsement in Heatons Transport, establish that those powers included the imposition of a fine in a case where disobedience to an order was made wilfully, in the sense of not casually, accidentally or unintentionally, and even though there was no contumacy, in the sense that the contemnor has not acted in deliberate defiance of the authority of the court. That law is part of the law incorporated by reference into s 24 of the Judiciary Act and, therefore, s 31 of the Federal Court Act. Under those circumstances, it must now be held - by way of significant qualification upon the sufficiency of what I have called the traditional dichotomy - that this Court does possess the power to impose a fine in a case of a completed but non-defiant failure to comply with its order. I note that this was the conclusion reached by Sheppard J - although as his Honour said "not without some hesitation" - in Coonan and Denley Pty Ltd v Superstar Australia (No 2) (1981) 57 FLR 118 at 129 - 131. That decision was taken on appeal - see (1982) 65 FLR 432 - but nothing was said in the Full Court to cast doubt upon the court's power to impose a fine."
In Mudginberri at 113 the High Court (Gibbs CJ, Mason, Wilson and Deane JJ with Brennan J agreeing in this issue said "a deliberate commission or omission which is in breach of an injunctive order or an undertaking will constitute such wilful disobedience unless it be casual, accidental or unintentional." An honest belief that action or inaction does not constitute a breach is not a defence: see McNair Anderson Associates Pty Ltd v Hinch [1985] VR 309 at 313 - 314. The second respondent's actions in relation to the second contempt were not casual, accidental or unintentional. His actions are therefore wilful for the purposes of the law. His belief, if he had such, of their innocence cannot assist him.
153 In relation to par (d) I do not consider that the quantum of funds involved in cash withdrawals was great. In Patrick Walker it was found by White J that on 29 December 2000 on the instruction of two directors of the first respondent, Williamson effected an electronic international money transfer of $190,000 from first respondent's bank account to an account in the name of TJ Rae (a brother of the second respondent in Spain). On 1 February 2000 he found that the first respondent's bank, again acting on instructions conveyed by a facsimile transmission from Williamson, undertook an electronic international money transfer of $110,000 from the first respondent's bank account to the account in the name of TJ Rae. These facts were common ground in this proceeding. Measured against them, the extent of the second respondent's contempt in respect of $14,000 (of which approximately $5,000 was repaid to staff members by the second respondent) is not at the same high level.
154 Turning to par (e) immediately above the second respondent continues in his submissions on sentencing to assert his honest belief that the acted within the bounds of the order. He fails to understand that he both breached the order and that his belief is not determinative of that circumstance. He submits that his breach should be regarded as technical only in that he lacked any intent to commit a breach and that no harm was done to any member of the public nor the administration of justice interfered with. I am not prepared to accept that the breach was technical only. It involved detailed transactions and a number of people. It is not, however, at the high end of the scale because the sum of money was not great and there were repayments.
155 The second respondent also submits that if the Court finds there has been a breach of the order - "though none is admitted" - the second respondent is willing to make a full apology to the Court by way of purging his actions. An apology is a relevant consideration: Australian Industry Group v Automotive Food Metals Engineering Printing and Kindred Industries Union [2000] FCA 708 and BHP Steel (AIS) Pty Ltd v Construction, Forestry, Mining and Energy Union [2002] FCA 792. In the first of those cases there was in respect of one of the contemnors an unreserved apology. The second respondent gives no such apology, maintaining that there is no admission of breach. In the second of those cases Kiefel J found in the circumstances pertaining there that the apology proffered in no way assuaged her concern that there was no real remorse. I am in the same position here. In all the circumstances present in this proceeding the apology proffered at the last moment and the terms in which it is made do not demonstrate any remorse to be taken into account. Indeed, the proffering is followed by a further statement that the second respondent "believed and still believed that his action fell within the bounds of the Court order as it was written and intended".
156 For the second respondent it is submitted that he has now obtained employment and that a prison term would put his employment and family at risk as he is the only income earner in the house. These assertions are unsupported by affidavit evidence. I nevertheless have well in mind that his assets and income are limited. He accepts that he would be able to pay a fine should one be imposed as long as it was not substantial and he was given time to pay.
Sentence in respect of first contempt
157 I consider that in respect of the first contempt the first respondent should be fined the sum of $2,000.
Sentence in respect of second contempt
158 I consider that in respect of the second contempt the first respondent should be fined $8,000.00.
159 I consider that the second respondent should be fined $4,000 in respect of the second contempt.
COSTS
160 A contemnor is often ordered to pay the applicant's costs on a solicitor and own client basis (Degman Pty Ltd (in liq) v Wright (No 2) [1983] 2 NSWLR 354 at 358; Marron v Salvemini; Re Scardigno [1969] WAR 178; Sunibrite Products (Australia) Pty Ltd v Jabuna Pty Ltd (1980) 47 FLR 73; In the Will of Mary Johnson (1907) 24 WN(NSW) 124; Flamingo Park Pty Ltd; Hughes at par [29]; Attorney General v Walthamstow Urban District Council (1895) 11 TLR 533; Lee v Aylesbury Urban District Council (1902) 19 TLR 106; Stancomb). It was said by Holland J in Degman Pty Ltd at 358:
"It is, in my experience, quite common to find, in cases where an application is made to the court for committal for contempt such orders being made in an endeavour to ensure that the party has been enforced to take that extra step, in order to obtain his rights, after they have been adjudicated by the court, may be relieved entirely of the expense of doing so and, although there is nothing in the rules about it, it is in my experience, common to find an order designed to give a party a complete indemnity against such costs, usually by an order that the contemnor pay the other party's costs on a solicitor and client or solicitor and own client basis but the object is to ensure indemnity."
In Hughes, indemnity costs were awarded in the applicant's favour, notwithstanding that Tamberlin J had found that there were considerable doubts as to whether the respondent would be able to pay a fine.
161 In submissions for the second respondent in relation to costs there is a reiteration of the declarations of innocence and absence of prior questioning by the applicant. The fact is, however, that the second respondent fought every conceivable aspect of the first and second contempt charges against the first respondent and, in the case of the second contempt, against himself (as he was entitled to do) but without regard to properly understanding the nature of the charges he faced and consideration of steps which may have reduced the costs in the bringing of the charges.
162 In my opinion there are good reasons why the applicant should have its order for indemnity costs in relation to the proceedings, except insofar as they are of an unreasonable amount or were unreasonably incurred so that, subject to such exceptions, the applicant will be completely indemnified by the first and second respondents: cf Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation [2001] HCA 26; (2001) 179 ALR 406 at 415, par [40].
I certify that the preceding one hundred and sixty-two (162) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice RD Nicholson. |
Associate:
Dated: 31 July 2002
Counsel for the Applicant: |
Mr AA Jenshel |
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Solicitor for the Applicant: |
Australian Government Solicitor |
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The second respondent appeared by leave on behalf of the first respondent in respect of the first alleged contempt | |
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The first respondent was not represented in respect of the second alleged contempt. | |
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The Second Respondent represented himself in respect of the second alleged contempt | |
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Dates of Hearing: |
20 April 2001; 15 June 2001; 7 & 14 September 2001; 29 October 2001; 5 December 2001 |
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Judgment Reserved |
15 January 2002 |
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Date of last written submission: |
17 July 2002 |
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Date of Judgment: |
31 July 2002 |
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URL: http://www.austlii.edu.au/au/cases/cth/FCA/2002/949.html