FEDERAL COURT OF AUSTRALIA

TiVo Inc v Vivo International Corporation Pty Ltd [2013] FCA 1340

THE COURT ORDERS THAT:

1.    It be declared that the first respondent is guilty of contempt by reason of the matters set out in charges 1, 2 and 6, laid against it in the Statement of Charge filed on 10 September 2013.

2.    It be declared that the second respondent is guilty of contempt by reason of the matters set out in charges 3, 4 and 7, laid against it in the Statement of Charge filed on 10 September 2013.

3.    It be declared that the third respondent is guilty of contempt by reason of the matters set out in charge 8, laid against it in the Statement of Charge filed on 10 September 2013.

4.    It be declared that the fourth respondent is guilty of contempt by reason of the matters set out in charge 9, laid against it in the Statement of Charge filed on 10 September 2013.

5.    The respondents pay the applicants’ costs in the contempt proceeding on an indemnity basis.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    On 10 September 2013 the applicants (which for convenience will be referred to collectively as “TiVo”) commenced proceedings seeking orders against the respondents alleging contempt for failure to comply with the orders which had been made by Dodds-Streeton J in the proceedings for trademark infringement. On 19 March 2012 her Honour had delivered judgment finding the first respondent, Vivo International Corporation Pty Ltd (“Vivo”), liable for trademark infringement, and on 23 March 2012 her Honour issued an injunction against Vivo giving effect to the judgment. The operation of the injunction was stayed pending appeal but resumed in effect from 14 November 2012. On 4 February 2013 TiVo filed an interlocutory application seeking, amongst other things, that Vivo cancel the registration of two domain names of which it was the registrant, namely <vivotvs.com> and <vivotvs.com.au>. That application resulted in orders made by consent on 21 June 2013 for the cancellation of the domain name registrations within six weeks of the date of the order, namely by 2 August 2013. The present proceeding for contempt alleges breaches of the 21 June 2013 orders and of the 23 March 2012 orders (which had resumed in effect on 14 November 2012). The third respondent, Red 88 Pty Ltd (“Red 88”), and the fourth respondent, Viano Corporation Pty Ltd (“Viano”), were joined, by consent on 16 October 2013, to the contempt proceeding which came to be heard on 29 October 2013.

2    The first five charges concern the failure to cancel registrations of the domain names as required by the consent orders made on 21 June 2013. The first two charges are against Vivo for having failed to cancel its registration for each of the two domain names respectively. The third and fourth charges are against the second respondent, Mr Fabio Grassia, for the same failures as are alleged in the first two charges against Vivo. Charge 5 is alleged against Red 88 in respect of the domain name <vivotvs.com> for the alleged contempt described in charge 2. Charges 6 to 9 concern alleged breaches of the injunction which had been made by Dodds-Streeton J on 23 March 2012 by the presence of product manuals relating to Vivo branded televisions on the website www.vianotv.com. Charge 6 directs the charge of that breach directly to Vivo, charge 7 directs it to Mr Grassia, charge 8 directs it to Red 88 and charge 9 directs it to Viano.

3    The jurisdiction of the Federal Court to punish contempt arises under Federal Court of Australia Act 1976 (Cth) (‘Federal Court Act”) s 31; see also Witham v Holloway (1995) 183 CLR 525 (“Witham v Holloway”). A person who is subject to an order of a court has a duty strictly to observe the terms of the order: ACCC v Hughes [2001] FCA 38 at [17]. In Ripcurl International Pty Ltd v Phone Lab Pty Ltd (2004) 63 IPR 496 (“Ripcurl”) Hely J said at 502-3:

As Tamberlin J observed in Australian Competition and Consumer Commission v Hughes, without the enforcement of court orders the whole process of adjudication becomes a hollow exercise. If a losing party can defy the orders of the court, then such disobedience renders futile in the perception of the community the remedy secured by the successful party. Defiance of court orders diminishes the authority of the courts. The offence involves interference with the effective administration of justice.

Unless the laws of contempt are properly enforced, the whole system of justice is at risk.

(Citations omitted)

Proceedings for contempt are essentially brought to punish non-compliance with orders of the Court and are criminal in nature, with the applicants bearing the onus to prove each charge beyond reasonable doubt: Witham v Holloway at 534.

4    In Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd [2003] VSC 201 Gillard J identified at [31]-[32] the elements to be established for a charge of contempt of court:

[31] In order to prove a civil contempt of court involving a breach of an order of the court, the plaintiff has to prove the following:

(i)    that an order was made by the court;

(ii)    that the terms of the order are clear, unambiguous and capable of compliance;

(iii)    that the order was served on the alleged contemnor or excused in the circumstances, or service dispensed with pursuant to the Rules of Court;

(iv)    that the alleged contemnor has knowledge of the terms of the order;

(v)    that the alleged contemnor has breached the terms of the order.

[32] ... in proving element (v) it must be proven that the act or omission which constituted the breach of the order was deliberate and voluntary.

This passage was adopted by Tracey J in Deckers Outdoor Corporation Inc v Farley (No 6) [2010] FCA 391 at [130]. In this case there is no dispute about the existence of the orders said to have been breached, or of their terms, or of service of the orders, or of knowledge of the terms of the order by the alleged contemnors.

5    The first charge is against Vivo and is in the following terms:

The First Respondent has failed to cancel its registration for the <vivotvs.com.au> domain name, by 2 August 2013 or at any later time, in wilful and contumacious breach of paragraph 1 of the orders made by consent by Justice Dodds-Streeton in this proceeding on 21 June 2013.

The particulars given concerning the contravention of the 21 June 2013 orders were as follows:

25. Since 2 August 2013, and continuing as at the date of this Statement of Charge, the domain name <vivotvs.com.au> has remained registered in the name of the First Respondent with the Second Respondent recorded as the registrant contact name.

26. It follows that the First Respondent has failed to cancel its registration for the <vivotvs.com.au> domain name, by 2 August 2013 or at any later time, in wilful and contumacious breach of paragraph 1 of the 21 June 2013 Orders.

There then followed further particulars referable specifically to the charge alleged against Mr Grassia to which I shall return later. Vivo accepts that the orders of 21 June 2013 were not complied with but defends the charge on two bases.

6    The first basis upon which Vivo seeks to defend the charge depends upon reading the terms of the charge as requiring Vivo to establish a continuing breach up to, at least, the date of the hearing of the charge. Vivo admits that it failed to cancel the registration of the domain name <vivotvs.com.au> by 2 August 2013, being six weeks after the date of the order, but maintains that the charge, upon its terms was not made out because the domain name was de-registered on 25 October 2013. That cancellation occurred pursuant to a request to Netregistry Pty Ltd (“Netregistry”) (which was the relevant domain name registrar for that domain name) made on 25 October 2013 after previous correspondence between Mr Grassia and his wife Ms Maria Cavalli, on behalf of Vivo. Vivo’s contention is that the fact of de-registration at some point before conclusion of the hearing necessarily means that the charge was not established according to its terms because by then it had been cancelled and, therefore, that it could not be said that Vivo had failed to cancel the registration either by 2 August 2013 “or at any later time” because there was a “later time” when the registration had been cancelled on 25 October 2013. I do not accept this reading of the charge to be open on the ordinary and natural meaning of the words in the context of the charge at the time it was brought. It may, of course, be accepted that the “accusatorial nature of the charge of contempt requires that there be strict compliance with the rules of procedure” (Jones v ACCC (2010) 189 FCR 390 at 410 [41]) but that does not require elevating possible ambiguity where a fair reading of a document is not otherwise ambiguous. In that context it may be useful to recall the observation in Pyneboard Pty Ltd v Trade Practices Commission (1982) 57 FLR 368 at 375:

Artificial dissection, in the cause of determined obfuscation, can introduce an argumentative element of uncertainty into words which, when read reasonably in context, are adequate to convey a plain and clear meaning….In this regard, the mere fact that parsing and analysis in the artificial atmosphere of the courtroom can lead to the identification of a number of latent ambiguities will not invalidate what, as a matter of common sense, is reasonably clear.

The charge in this case was issued on 10 September 2013 and its terms should be read as speaking from that date. The charge is that Vivo had failed to comply with the order by the date that it was to have cancelled the registration pursuant to the terms of the order and that the failure continued beyond the date by which it was required to have been complied with. No person reading the charge would reasonably have concluded that it had been laid on the basis that the breach was limited to one that continued until whenever the hearing may come to be and, therefore, that the charge of contempt for failure to comply with the order until then could be defeated by complying with the order at any time before the hearing and determination of the application for contempt. The natural and proper reading of the charge is that the failure is one of not having complied with the order by the date required by the order and that the failure continued on each and any subsequent date until complied with. The contempt charge will be made out if TiVo establishes that the order had not been complied with by 2 August 2013 and for any subsequent date when it continued not being complied with until it was complied with.

7    The second basis upon which Vivo challenges the first charge is by submitting that TiVo has not established beyond reasonable doubt that the failure was wilful and contumacious. That submission in part depended upon the legal standard to be established for conduct to be wilful and contumacious and in part upon the evidence relied upon for the alleged contemnors to the effect that any failure had been the product of the forgetfulness of Mr Grassia.

8    It was submitted for Vivo that a finding of contempt required establishing a breach to have been wilful and contumacious in the sense of a “deliberate defiance” of a court order. In this regard reliance was placed upon the definition of “contumacious” in the Macquarie Dictionary as meaning “stubbornly perverse or rebellious; wilfully and obstinately disobedient to authority”. However, the word “contumacious” in this context has been used in the narrower sense of “wilfully”: Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 111 (“Mudginberri”). Defiant disobedience may no doubt also amount to contempt (see for example Witham v Holloway at 530) but a breach of a court order may be a contempt without needing to establish contumacious behaviour beyond the sense in which the word is used as a synonym of “wilful”. In Mudginberri the plurality said at 111-2:

In Steiner Stamp J imposed a fine upon the defendants as punishment for a contempt constituted by breach of an undertaking to the court in a case which was not one which it was “possible to regard as an obstinate disregard” of the undertaking but which was “simply a case of a failure by the company, for no excuse whatever, to carry out the terms of its undertaking”. In the course of his judgment, Stamp J pointed out that the Court of Appeal in Fairclough, in expressing the view that it was necessary, in such cases, that the court's “order has been contumaciously disregarded”, was using the word “contumaciously” in the narrow sense of “wilfully”. Stamp J expressed the conclusion, in support of which he cited the judgments of Chitty J in Attorney-General at the Relation of the Leyton (Essex) Urban District Council v Walthamstow Urban District Council and Warrington J in Stancomb v Trowbridge Urban District Council, that any “disobedience which was worse than casual, accidental or unintentional must be regarded as wilful”. His Lordship had earlier indicated that, if the effect of the decision of Stirling J in Worthington was that “nothing short of stubborn opposition to the terms of an order or undertaking amounted to wilful disobedience so as to be punishable by proceedings for attachment”, he was not prepared to follow it. In that regard, it is of interest to note that in Mileage Conference the members of the Restrictive Practices Court, who included Megaw J as President and McVeigh LJ, suggested that the approach of Stirling J in Worthington, which they rejected, had resulted from the fact that the only report of Fairclough which had been cited to Stirling J had been “the abbreviated eight-line report in the Weekly Notes, and not the fuller and better report in the Solicitors Journal” and that Windeyer J, in Morgan, had likewise referred only to the report of Fairclough in the Weekly Notes when citing that case and Worthington in support of the proposition that conduct which was “wilful, but not contumacious”, was not punishable by fine or sequestration. In Mileage Conference, the members of the Restrictive Practices Court accepted as correct the view of the law expressed by Warrington J in Stancomb, namely, that it is no answer to proceedings for contempt “to say that the act was not contumacious in the sense that, in doing it, there was no direct intention to disobey the order”. Thus, it would suffice that the relevant act or omission was wilful even if, in a case where the breach was constituted by an act or failure to act by a servant or agent, the act or omission of the servant or agent was “through carelessness, neglect, or even in dereliction of his duty” (per Warrington J in Stancomb). In Mileage Conference itself, substantial fines were imposed on companies for contempt by breach of undertaking which was not merely non-contumacious but was committed reasonably on legal advice.

(Citations omitted)

At [113] their Honours in Mudginberri expressly accepted the views which had been expressed in the then recent cases and made clear both that the test to establish a contempt does not require establishing defiance on the part of the alleged contemnor and also that carelessness, neglect or dereliction of duty will not be a sufficient answer to a charge of contempt.

9    Vivo next contended that the Court could not be satisfied beyond reasonable doubt that the breach was wilful or contumacious because of the evidence given by Mr Grassia that he forgot about the order and gave reasons explaining why he had forgotten. In Mudginberri the plurality quoted the passages set out above and continued at [113]:

In our view the reasons supporting the recent decisions are compelling and they should be accepted by this Court. It follows that 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.

Vivo’s failure to take steps to cancel the registration until 5 August 2013 was said to have been due to its managing director, Mr Grassia, simply forgetting to comply with the order. It was thus contended that Mr Grassia’s forgetfulness, in the circumstances he explained, did not amount to contempt because the failure to comply with the order by reason of the forgetfulness was to be seen as “casual, accidental or unintentional”. In considering this question it is relevant that the court had, in the passage quoted above, referred to earlier authority with apparent approval expressing it as sufficient to establish that a contempt was wilful where the breach of an order was “through carelessness, neglect or even in dereliction of […] duty.”

10    It had been Mr Grassia who had given instructions on behalf of Vivo to consent to the orders which had been made on 21 June 2013 but he took no steps to ensure Vivo’s compliance with the order within the time required by the order. He did take steps on 5 August 2013 (although in oral testimony he said that he was not sure whether it had been on 5 or 6 August) to cancel the two registrations which should have been cancelled on 2 August 2013 but sought to explain the delay to forgetfulness in the context of other events in his business and domestic affairs. His evidence-in-chief was as follows:

Counsel: Now, are you able to say why the two domain names were not – sorry, the registration of the domain names was not cancelled by 2 August 2013?

Grassia: I genuinely forgot.

Counsel: Are you able to say why it is that you forgot?

Grassia: At the period of time, my wife was pregnant. We were understaffed, trying to manage the business at the same time. My wife then gave birth to a baby boy. I had to caretake the two year old. We don’t have family, my wife doesn’t have family. I had the court case behind my back for the last two years. It stresses me out. Has stressed me out and my family. I just wasn’t thinking.

It may be that forgetfulness can in some circumstances amount to a breach which is “casual, accidental or unintentional”, and it is conceivable that at some point after 21 June 2013 the fact that a court order needed to be complied with slipped Mr Grassia’s mind, but his forgetfulness was more the product of the failure to act upon the order than a reason for the failure. On 21 June 2013 orders were made with his consent and instructions. It was incumbent upon him from that moment to take steps to have the court order complied with. He took no steps at any stage from 21 June 2013 until, at best, 5 August 2013 to act upon the order which he had consented to be made on behalf of Vivo. It was the complete absence of any attempt to ensure that the court order was complied with from 21 June 2013 that permitted the possibility of him forgetting to comply with the order when other circumstances arose that might otherwise distract his attention, including, amongst other things, the need to manage his business and the birth of a son. The wilful and contumacious behaviour on the part of Vivo can be seen by the total absence of any attempt or action on Mr Grassia’s part commencing from 21 June 2013 and continuing until, at best, 5 August 2013 to implement the order. He gave no evidence of any attempt of any kind showing any intention to ensure that Vivo would comply with the order he had consented to be made by this Court until 5 August 2013.

11    TiVo contended that the contempt continued until 25 October 2013 when the registration of the domain name was finally cancelled because what Mr Grassia did on 5 August 2013 did not cancel the registration of the domain name <vivotvs.com.au>. It is therefore necessary to consider the events occurring after 2 August 2013.

12    The consent orders made on 21 June 2013 gave Vivo six weeks within which to effect the cancellation of the two domain names of which it was the registrant. That period of six weeks came to an end on 2 August 2013. On 5 August 2013 Mr Timothy Creek, a solicitor acting for TiVo, accessed the website for the two domain names and conducted searches for the registrant of each. Those steps revealed that both domain names were still registered with Vivo as the registrant. On that day Mr Creek wrote to the solicitors for Vivo noting that the orders had not been complied with and requesting the immediate cancellation of the domain names as required by the orders. The contents of that letter were brought to the attention of Mr Grassia by a solicitor acting for Vivo, Ms Sarina Roppolo, which prompted immediate (if partly ineffective) action. Mr Grassia gave evidence that upon learning that the order had not been complied with, he immediately went onto the relevant websites with a view to cancelling Vivo’s registration of each. His efforts were effective on 6 (US time) or 7 August 2013 (Australian time) in respect of the domain name <vivotvs.com> but not with respect to the domain name <vivotvs.com.au>.

13    The registrar of the <vivotvs.com> domain name was Go Daddy Operation Company LLC whose database was accessible through www.godaddy.com while the registrar of the <vivotvs.com.au> domain name was Netregistry the registered details of which were obtainable on an online database at www.ausregistry.com.au operated by AusRegistry Pty Ltd. Mr Grassia gave evidence that after his conversation with Ms Roppolo on 5 August 2013 he “immediately went onto the Netregistry website, logged in, inserted the account number”, found a search menu entitled “Support on how to cancel domain name” and clicked the icon for the cancellation of the domain name going through the various steps required for the process as he understood them. That process, as a careful reading of the information revealed, brought about a cancellation of Netregistry’s “service” to Vivo but not a cancellation of the <vivotvs.com.au> domain name registration. What appeared to Mr Grassia in Netregistry’s web page under the heading “How to cancel a domain name” was not long or complicated and included the clear statement that “the domain name registrant must submit a written request for the de-registration of the domain”. The distinction between registration and service is important and may have commercial consequences. Cancellation of service only does not cancel registration with whatever consequences may attach to an active registration albeit without service. Mr Grassia did not cancel the registration but did cancel the “services” for the domain name <vivotvs.com.au>. At 10:11 AM on 6 August 2013 he received an email from Netregistry informing him that they had received a request to cancel “service” on that domain name. Mr Grassia’s evidence was that he genuinely thought that cancelling the service would have resulted in the de-registration of the domain name. A careful reading and understanding of the material would not have lead him to that conclusion, but I accept that he subjectively had that belief however wrong it was, and however carelessly he had reached it. I make that finding in part upon the clear evidence of his attempt to cancel the service and also from the fact that he did manage to cancel the <vivotvs.com> domain name of which Go Daddy Operation Company LLC was the registrar (presumably in the United States of America). There would be no point in de-registering only one domain name and I see no reason to reject his evidence of an intention to cancel the registration of the domain name <vivotvs.com.au> by his step of cancelling the service which undoubtedly occurred, albeit that he was careless in what he did.

14    There is further support for Mr Grassia’s intention to cancel the registration of the <vivotvs.com.au> domain name from a letter he wrote on Vivo letterhead dated 6 August 2013 to Netregistry specifically requesting the de-registration of the domain name as well as the cancellation of any services related to the domain name. The existence of the letter, and its terms, somewhat undermines his testimony that he thought the cancellation of the service was sufficient also to de-register the domain name, however, it supports an intention to complete the task needed to cancel the registration of the <vivotvs.com.au> domain name. There was some doubt about whether the letter was genuine because there was no evidence of its receipt by the intended recipient but I accept that it was written on the date it bore and that it was, probably, posted at about the date it bears.

15    Mr Grassia’s evidence was that he wrote the letter after reading how to cancel a name on Netregistry’s website but explained in his evidence that he thought that the written request was a formal step required for cancellation of the domain name with Netregistry which he said he had thought he had done on the website, and therefore, that he believed that the domain name was effectively cancelled once he had cancelled the service and had sent the letter. The letter appears not to have reached Netregistry but there is no evidence to reject Mr Grassia’s evidence of him having sent it. I accept his evidence that he wrote the letter on 6 August 2013 and therefore accept the evidence that he sent it. In that regard I note in particular his evidence that he scanned the letter before posting it. A copy of the letter tendered in evidence has his signature and the letter is consistent with his evidence of having scanned a copy onto his own computer. Mr Grassia was not cross-examined about that evidence and it may be inferred that the details that may have been recorded on his computer of the scanning of the letter would be consistent with his testimony of it having been scanned in that form on or about 6 August 2013.

16    Three days later he received another email from Netregistry informing him that it had completed his request for cancellation of the services on <vivotvs.com.au>. That email went on to say that the domain was “still currently registered” and that Netregistry was “unable to remove it from [Vivo’s] account” and, therefore, that he would need to wait for it naturally to expire or “manually request” for Netregistry to de-register it. On that date, however, Mr Grassia (and therefore relevantly Vivo) assumed that the letter posted three days earlier would eventually bring about the necessary cancellation of the registration. Proper attention to the requirements of the registrar for cancellation of the domain name <vivotvs.com.au> would have put Mr Grassia on notice that he had not succeeded in complying with the court order; that is, that he had failed to effect cancellation of the registration (as distinct from cancellation of its service) but I accept that Mr Grassia subjectively held the contrary erroneous belief.

17    In fact the domain name with Netregistry was not de-registered with Mr Grassia’s attempts on or around 5 or 6 August 2013. Nor were the efforts he had made to effect registration communicated to the TiVo or to their solicitors. The failure to inform TiVo’s solicitors of the efforts which Mr Grassia had made to cancel the registration of the domain names was unexplained and was contrary to the obligations upon the parties to, and their practitioners in, civil proceedings. The principal proceeding between Vivo and TiVo has not yet been finalised with quantum still to be determined. The application for contempt may be discrete from the main proceeding between them but the contempt application is an incident of that proceeding and was issued as an interlocutory proceeding within it. Section 37M of the Federal Court Act describes the overarching purpose of civil practice and procedure to be to facilitate the just resolution of disputes according to law as quickly, inexpensively and efficiently as possible. Section 37N of that Act imposes direct obligations upon parties to civil proceedings to conduct proceedings in a way that is consistent with that overarching purpose. The letter of 5 August 2013 from TiVo’s solicitors to Vivo’s solicitors had foreshadowed contempt proceedings and requested both the immediate cancellation of the domain names and notification to them on behalf of their clients that the registration had been cancelled. The solicitors for TiVo had informed the solicitors for Vivo that the domain names had not been cancelled and plainly believed that to be the case. It was incumbent upon Vivo to have instructed its solicitors to inform TiVo’s solicitors if the position as they understood it were not the case or if that position had changed. The understanding upon which TiVo’s solicitor had written was correct and could only be changed if Vivo, through Mr Grassia, brought about a change to that position by cancellation of the registrations. Failing to inform TiVo’s solicitors that Mr Grassia had sought to effect a cancellation on 5 August 2013 left TiVo believing that the position had not changed from 2 August 2013 and that Vivo had done nothing to comply with the orders. In Shearpond Pty Ltd v Atune Financial Solutions Pty Ltd (No 2) [2013] FCA 716 Jessup J said at [19]:

In my view, once it became apparent to the respondents that the applicant was proceeding on a misapprehension as to an adjectival, but important, question as to which they had knowledge of the correct position, it was not consistent with the achievement of the purpose referred to in s 37M of the Federal Court of Australia Act 1976 (Cth), or with their obligations under s 37N(1) of that Act, for them to have omitted to inform the applicant of that position. There was ample time for them to have done so. In this regard, I would refer to what had been said by Allsop J (as he then was) in White v Overland some years before the enactment of those provisions, but self-evidently in harmony with the philosophy of them:

[W]here it is evident, or indeed suspected, that the other side is proceeding on the basis of a misconception or has not appreciated something, as a general rule, efficiency, common sense and an appreciation of the costs and resources (both public and private) likely to be wasted by confusion in litigation will mandate that a party through his or her representative ensure that the other is not proceeding on a misconception or that the other does appreciate something that has been said.

Similarly, Vivo, through Mr Grassia, ought to have instructed its solicitors immediately to inform the solicitors for TiVo that steps had been taken to cancel the registration because it was clear from the terms of the letter that TiVo believed that the domain name registrations had not been cancelled.

18    On 10 September 2013 TiVo commenced this contempt proceeding not knowing of Mr Grassia’s attempts, albeit ineffective, on 5 August 2013 to cancel the registration of the domain name <www.vivotvs.com.au> with Netregistry. On 10 September 2013 Mr Creek, amongst other things, conducted a domain name registrant search for the registrant details of the <vivotvs.com.au> domain name. The search results showed Netregistry as the registrar ID and continued to show Vivo as the registrant and Mr Grassia as the registrant contact name. The status was shown as “ok” and gave no indication of the domain name registration having been cancelled. These contempt proceedings were issued on 10 September 2013 and were served personally upon Mr Grassia as well as, it seems, on Vivo’s solicitors. His evidence was that he became aware some time in September that TiVo’s solicitors were asserting that the registration of the <vivotvs.com.au> domain name had not been cancelled when he was served with a folder and was also contemporaneously telephoned by his solicitor but, of course, from the point of view of TiVo, the position was that (at least in respect of the <vivotvs.com.au> domain name) they had had no response to their letter and believed that the domain name registration had not been cancelled. Indeed, on 15 October 2013, Mr Creek again conducted a domain name registrant search for <vivotvs.com.au>. The search again revealed the status of the domain name registration as “ok”, with Netregistry as the registrar ID and with Mr Grassia as the registrant contact name.

19    Vivo’s position appears to be that between 5 or 6 August 2013 and the day in September when it was served with the contempt proceedings, it had believed that the registration of both domain names had been cancelled. Vivo’s position upon receipt of the contempt proceedings, as revealed by Mr Grassia’s evidence, was of being confused because he believed that the registration of the domain names had been cancelled. Mr Grassia was overseas on at least one occasion during the period between the service upon Vivo and him of the contempt proceedings and the hearing commencing on 29 October 2013. During that time it fell to Mr Grassia’s wife, Ms Cavalli, to deal with the cancellation of the registration of the domain name. However, it was not until 12 October 2013 that Ms Cavalli sent an email to Netregistry asking for urgent information about whether the domain name registration had correctly been cancelled. Two days later she was informed by Netregistry that the domain name was still registered and was told that to de-register the domain name required following a certain process. Ten days later she replied to Netregistry saying that Vivo had already sent a letter on 6 August 2013 requesting cancellation of the domain name registration and attached a copy of that letter. Further email exchanges occurred which ultimately included confirmation on 25 October 2013 that the domain name had been de-registered on 25 October 2013.

20    The evidence thus establishes that the order had not been complied with by Vivo in respect of the <www.vivostv.com.au> domain name until 25 October 2013. The failure to comply with the order until then is not one which I can regard as being “casual, accidental or unintentional” but that it was, at best, “through carelessness, neglect or even in dereliction of […] duty”. The registration was not cancelled by Vivo because it, through its officers, agents and employees, did not take the care needed to effect what the Court had ordered. Confusion, other obligations and forgetfulness may all be matters to be taken into account by a court when asked to vary orders, but of themselves are not a sufficient excuse for non-compliance in an existing order. Accordingly, I find the first charge established.

21    Charge 2 alleges:

The First Respondent has failed to cancel its registration for the <vivotvs.com> domain name, by 2 August 2013 or at any time later, in wilful and contumacious breach of paragraph 1 of the 21 June 2013 Orders.

The particulars given for this contravention in respect of Vivo were:

28. Since 2 August 2013, and continuing as at the date of this Statement of Charge, the domain name <vivotvs.com> has directed internet users to a web page displaying the domain name <vi-vo.com>.

29. Since 2 August 2013, and continuing as at the date of this Statement of Charge, the domain name <vi-vo.com> has been registered in the name of the Second Respondent and Red 88 (which is effectively controlled by the Second Respondent), with the registrant email identified as Fabio@vivotvs.com.

30. It may be inferred that the First Respondent has failed to cancel its registration for the <vivotvs.com> domain name, by 2 August 2013, or at any other time, in wilful and contumacious breach of the 21 June 2013 Orders, by reason of the following facts:

(a)    the <vivotvs.com > domain name remains in operation; and

(b)    the First Respondent has procured its <vivotvs.com> domain name to be configured to direct internet users to a website effectively controlled by the Second Respondent.

22    Vivo admits breaching the order by having failed to cancel the registration of the domain name <vivotvs.com> by 2 August 2013 but challenges the claim on the same construction of the charge which I have rejected in relation to the first charge, namely on the basis that the terms of the charge can be answered by establishing its cancellation on 6 (US time) or 7 August 2013 (Australian time) as a result of Mr Grassia taking steps on 5 August 2013 to cancel the registration, notwithstanding a breach between 2 August and 6 (or 7) August 2013. I reject that construction of the charge for the same reasons as I have set out above and find that the cancellation did not occur until either 6 or 7 August 2013 (the date depending upon difference in time zones between Australia and the United States of America).

23    Vivo, of course, did not inform the applicants, or their solicitors, that the domain name had been cancelled by what Mr Grassia had done in Australia on 5 August 2013. Indeed, TiVo’s solicitors contended that they continued to believe that the domain name had not been cancelled until the commencement of these proceedings. The searches which Mr Creek had undertaken from 10 September 2013 also included searches for the domain name <vivotvs.com> and those searches showed a change to the registration of that domain name since the searches which he had undertaken in August. The result of Mr Creek’s search on 10 September 2013 was, however, ambiguous because under the name vivotvs.com there appeared the word “(Registered)”. However none of the other references which had linked the registration to Vivo in the result of his searches in August appeared in the result of his search on 10 September 2013 and, more particularly, the result produced the statement that there was “No match for “vivotvs.com.” in the registrar database”. In fact the cancellation of the registration of the vivotvs.com domain name had occurred around 7 August 2013 (United States time) but the charge is nonetheless proven to the extent that the registration had not been cancelled by 2 August 2013. The failure to inform the TiVo’s solicitors of the steps taken by Mr Grassia on 5 August 2013 to cancel (in this case successfully) the registration of the domain name <vivotvs.com> may, however, be relevant to penalties and costs.

24    The third and fourth charges are in substance the same as the first and second except that the alleged contemnor is Mr Grassia and his contempt is said to be in causing, aiding, abetting or knowingly assisting Vivo’s contempt. Relevantly the charges are:

Charge 3

The Second Respondent has wilfully and contumaciously engaged in culpable conduct in his capacity as the sole director (until 27 June 2013) and/or effective controller of the First Respondent, to cause, aid, abet or knowingly assist the First Respondent’s contempt of the 21 June 2013 Orders set out in Charge 1.

Charge 4

The Second Respondent has wilfully and contumaciously engaged in culpable conduct in his capacity as the sole director (until 27 June 2013) and/or effective controller of the First Respondent, to cause, aid, abet or knowingly assist the First Respondent’s contempt of the 21 June 2013 Orders set out in Charge 2.

The additional particulars relevant to the third charge are:

27. Given that the Second Respondent has had knowledge of the 21 June 2013 Orders since 21 June 2013, has been in effective control of the First Respondent since that time, and remains recorded as the registrant contact name for the domain name <vivotvs.com.au>, it follows that the Second Respondent has wilfully and contumaciously engaged in culpable conduct to cause, aid, abet or knowingly assist the First Respondent’s contempt of the 21 June 2013 Orders set out in Charge 1.

The additional particulars relevant to the fourth charge are:

31. Given the Second Respondent’s effective control of the First Respondent and Red 88, the Second Respondent has wilfully and contumaciously engaged in culpable conduct to cause, aid, abet or knowingly assist the First Respondent’s failure to cancel its registration for the <vivotvs.com> domain name set out in Charge 2.

25    The order made by Dodds-Streeton J on 21 June 2013 was directed to Vivo rather than, directly, to Mr Grassia, but the power to punish for contempt “extends to third parties who, whilst not themselves bound by an order, so conduct themselves as to obstruct the course of justice”: Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 395. In CCOM Pty Ltd v Jiejing Pty Ltd (1992) 36 FCR 524 Drummond J dealt with the accessorial liability of a third party at 530-1:

[Mr McCullagh’s] position is different from that of CCOM and Messrs Thomas and Garnham. Unlike Mr McCullagh, the latter are all parties to the action and are in terms bound by the undertaking. They having given the undertaking to the court, all that has to be proved to show that they are guilty of contempt is that there was a failure – and the reasons why are immaterial – of that undertaking to be carried into effect. Their liability for contempt is strict, although the intention with which the omission was made will be very relevant to the question of penalty if any.

Mr McCullagh however is not a party to the action and is not bound by the undertaking. Such a person is not subject to the strict liability in contempt which rests upon a person bound by the undertaking that is breached. However a person who is not in terms bound by an undertaking but who knows of it and who then does something which disrupts the situation created by the undertaking may, but not necessarily must, be guilty of contempt of court.

(Citations omitted)

In Zhu v Treasurer of The State of New South Wales (2004) 218 CLR 530 the High Court said in a joint judgment at 571-2:

Intervention against persons who, though not personally bound by a court order, procure those who are bound by it to contravene it, or otherwise thwart it, rests on a different basis: those persons are not liable as accessories who aided and abetted the person bound by the order, but are directly liable for independent contempts committed by themselves in obstructing the course of justice.

The distinction between the liability of a person bound by an order and that of a third party was explained in Sigalla v TZ Ltd [2011] NSWCA 334 at [14]-[17] and in Sassine v Ray & Sons Construction Pty Ltd [2012] NSWSC 1346 at [11]. The principles were recently applied by Tracey J in Connect TV Pty Ltd v All Rounder Investments Pty Ltd (No 3) [2013] FCA 98 when upholding a charge of contempt against a director of a company that had been bound by an order. The director in that case was not herself a party to the orders which had been breached but was found to have engaged in culpable conduct in her capacity as sole director of the company by causing the company to act in wilful and contumacious disobedience of the order which required the company to take certain steps. His Honour concluded that the director’s failure “to take any steps to contact” a person in order to seek to persuade that person to cease utilising the company’s services “constituted a deliberate and voluntary omission to comply with” the terms of an order by which her company was bound: at [67].

26    Mr Grassia accepts that he knew about the orders which had been made on 21 June 2013 but that he did not do something which disrupted the situation created by the order or which he knew would prevent achieving their intended object. He did however fail to implement the order which Vivo was required to comply with. He was its managing director and had consented on Vivo’s behalf to the order. He took no steps at any stage to have Vivo comply with the order in disregard of an obligation which he knew had been assumed by Vivo through him. I find, therefore, charges 3 and 4 proven on the same evidence, and for the same period, as charges 1 and 2.

27    Charge 5 is alleged against Red 88. It alleges:

Red 88 has wilfully and contumaciously aided, abetted or knowingly assisted the First Respondent’s contempt of the 21 June 2013 Orders set out in Charge 2.”

The additional particulars relevant to this charge were stated as:

32. Given Red 88’s knowledge of the 21 June 2013 Orders, its control of the <vi-vo.com> domain name, and its permission to have the <vivotvs.com> domain name directing internet users to a web page displaying its domain name <vivo.com>, Red 88 has wilfully and contumaciously aided, abetted or knowingly assisted the First Respondent’s failure to cancel its registration for the <vivotvs.com> domain name set out in Charge 2.

The particulars for this charge also included reference to the fact that the domain name <vi-vo.com> had been registered in the name of Mr Grassia and Red 88. Mr Grassia was the sole director, secretary, shareholder and effective controller of Red 88 at all material times.

28    I do not find charge 5 proven. The conduct relevant to Red 88 appears to be little more than that a search which was undertaken by Mr Creek on 13 August 2013 which revealed that Red 88’s domain name <vi-vo.com> had been displayed at the <vivotvs.com> domain name at the time of the search. There was no conduct referable to Red 88 which could relevantly be said to be a cause of any failure to comply with the orders of 21 June 2013.

29    Charges 6 to 9 all relate to breaches of the 23 March 2012 orders, namely, the presence of a product manual relating to Vivo branded televisions being displayed on website www.viano.com. Charges 7 to 9 all depend upon charge 6. Charge 6 alleges:

From a time after 14 November 2012 until at least 1 August 2013, the First Respondent wilfully and contumaciously disobeyed the injunction in paragraph 2 of the orders made by her Honour Justice Dodds-Streeton in this proceeding on 23 March 2012 (the 23 March 2012 Orders) by procuring, causing or allowing the display of product manuals relating to Vivo branded televisions to be displayed on the website www.viano.com.”

The particulars relevant to charge 6 are:

33. Since 5 January 2010:

(a)    the domain name <vianotv.com> has been registered in the name of Red 88; and

(b)    Red 88 has used that domain name to host a website www.vianotv.com advertising the business of Viano (the Viano Website).

34. From a time after 14 November 2012 until at least 1 August 2013:

(a)    the Viano website provided product manuals relating to VIVO branded televisions and prominently featuring the VIVO trade mark (the VIVO Product Manuals).

(b)    the First Respondent provided the VIVO Product Manuals to Viano and Red 88 and authorised their use of the VIVO Product Manuals on the Viano website.

35. It follows that the First Respondent wilfully and contumaciously disobeyed the injunction in paragraph 2 of the 23 March 2012 Orders by procuring, causing or allowing the display of product manuals relating to VIVO branded televisions to be displayed on the website www.vianotv.com.

30    On March 23 2012 her Honour had ordered:

The first respondent/cross-claimant, whether by itself, its directors, employees or agents or howsoever otherwise be restrained from infringing the second applicant’s Trade Mark Registration No. 813297 for TIVO (the TIVO mark) by using in respect of televisions, portable DVD players, computer monitors, digital set-top boxes, digital photo frames, remote controls or home theatre systems, the VIVO mark or any other mark substantially identical with or deceptively similar to the VIVO mark.

Searches conducted by Mr Creek on 1 August 2013 revealed that the www.viano.com website permitted access and downloading from that site of user manuals for Vivo branded televisions. There was no challenge to the proposition that the application of the trademark to the users manual was a use within the meaning of s 7 of the Trade Marks Act 1995 (Cth) and that its presence on the manuals on the website was a contravention of the orders which her Honour had made on 23 March 2012. What was contested, however, was whether the existence of the product manuals on the Viano website was something for which Viano, or one of the other alleged contemnors, was responsible. Mr Grassia and Ms Cavalli both said that they had no knowledge of how the user manuals came to be on the Viano website. Mr Grassia also said that Vivo was no longer selling or marketing Vivo products after 14 November 2012 although Viano still looked after warranty claims for Vivo equipment.

31    Mr Grassia’s emphatic evidence of knowing nothing about how the product manuals came to be on the Viano website may appear to be astonishing in light of the litigation between the parties in which he was so intimately involved. It may be thought extraordinary that Mr Grassia could permit any circumstance to arise in which a breach of orders could occur without his knowledge: prudence, if not duty, might have made him ensure that accidental breach could not have occurred, However, his evidence must be evaluated in the context of the other evidence concerning the management of websites for Vivo, Red 88, and Viano. The evidence of Mr Grassia and his wife, Ms Cavalli, was consistently that any material placed on the websites of their companies was put there by a Mr Don Fazio when forwarded to him by either Mr Grassia or Ms Cavalli. Her evidence in this respect was:

Counsel: What is your role in relation to [the Viano] website?

Ms Cavalli to the website. Okay. For the website, I normally forward information to our external website person, which is Don Fazio. And yes, I communicate with him in regards to what we want to put on the website or – yes, what needs to be done on the website.

Only Mr Grassia and Ms Cavalli were authorised to give instructions for the loading of content to the Viano website and Mr Grassia was Viano’s managing director. There was no suggestion that the product manuals had been loaded onto the Viano website other than with authority of Mr Grassia or Ms Cavalli.

32    The orders which had been made on 23 March 2012 only came into effect on 14 November 2012 after the conclusion of the appeals. Viano was incorporated soon after the orders resumed in effect, as was the registration of Viano’s domain name. A company search for Viano tendered in evidence through Mr Creek shows its registration date to be 20 November 2012 and with Mr Grassia as its sole director. Mr Creek’s domain name search for www.vianotv.com revealed its creation date to be 19 November 2012 with the registrant as Mr Grassia. It also showed Red 88 as the registrant organisation but, relevantly, Mr Grassia appears to have been the sole director of Red 88 and it had no other employees. The user manuals which were on the Viano website on 5 August 2013 plainly contained a user manual for a product bearing the Vivo mark. The product manuals which were accessible through the Viano website bore the website address of Vivo and the obvious conclusion is that it was Vivo (through Mr Grassia) who provided the manuals to whoever put them on the Viano website. In those circumstances I find that Mr Grassia authorised the placement of the product manuals on the Viano website even though he may have done so through a failure to pay sufficient attention to the content that was being posted onto the Viano website. I accept Ms Cavalli’s evidence that she did not know how the material came to be on the website and that it was unlikely to have been authorised, even inadvertently, by her. It was Mr Grassia who was the managing director of the company and any authorisation of what was to go on the Viano website came from him. I therefore find charge 6 proven.

33    Charge 7 alleges:

The Second Respondent has wilfully and contumaciously engaged in culpable conduct in his capacity as the sole director (until 27 June 2013) and/or effective controller of the First Respondent to cause, aid, abet or knowingly assist the First Respondent’s contempt of the 23 March 2012 Orders set out in Charge 6.”

The additional particulars relevant to this charge are:

36. Given the respondent’s knowledge of the 23 March 2012 Orders and his sole directorship (until 27 June 2013) and/or effective control of the First Respondent, the Second Respondent has wilfully and contumaciously engaged in culpable conduct in his capacity as the director and/or effective controller of the First Respondent to cause, aid, abet or knowingly assist the first respondent’s contempt of the 23 March 2012 Orders set out in Charge 6.

I find this charge proven for the same reasons as for charge 6. The accessorial liability of Mr Grassia was his failure to have taken steps to ensure compliance with the order when having taken the steps involved in the creation of the Viano website and the incorporation of Viano with himself as its director.

34    Charge 8 alleges:

Red 88 has wilfully and contumaciously aided, abetted or knowingly assisted the First Respondent’s contempt of the 23 March 2012 Orders set out in Charge 6.”

The additional particulars relevant to this charge are:

Given Red 88’s knowledge of the 23 March 2012 Orders and its control (with Viano of the Viano website, Red 88 has wilfully and contumaciously aided, abetted or knowingly assisted the First Respondent’s contempt of the 23 March 2012 Orders set out in Charge 6.

I find charge 8 also to be proven. Red 88 appears as the registrant organisation for Viano with Mr Grassia as its registrant. Mr Grassia is the sole director and controller of Red 88 and the user manuals appeared on the Viano website which Red 88, through Mr Grassia, knew ought not to have been there and ought to have taken steps to ensure would not have been on the website in breach of the 23 March 2012 orders.

35    Charge 9 alleges:

Viano Corporation Pty Ltd has wilfully and contumaciously aided, abetted or knowingly assisted the First respondent’s contempt of the 23 March 2012 Orders set out in Charge 6.”

The additional particulars to this charge are:

38. Given Viano’s knowledge of 23 March 2012 Orders and its control (with Red 88) of the Viano website, Viano has wilfully and contumaciously aided, abetted or knowingly assisted the First Respondent’s contempt of the 23 March 2012 Orders set out in Charge 6.

The position of Viano is relevantly no different from Red 88. Viano operated the Viano website and its knowledge and conduct is relevantly that of Mr Grassia. Accordingly, I find charge 9 to be proven.

36    The applicants do not ask the Court to impose a penalty for the breaches but do seek costs on an indemnity basis. In Concrete Constructions Pty Ltd v Plumbers & Gasfitters Employees’ Union (1987) 15 FCR 64 Wilcox J said at 86-7:

The applicants each seek an order for costs in their favour on an indemnity basis, that is, costs to be taxed as between solicitor and own client. Such an order is not uncommon in contempt proceedings, reflecting the view that a party should not be further prejudiced — by being required to bear the difference between party/party costs and solicitor/client costs — by the failure of the opponent to comply with an order of the court. The relevant policy was expressed by Holland J in Degmam Pty Ltd (In liq) v Wright (No 2) [1983] 2 NSWLR 354 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 that 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 an indemnity.”

In Ripcurl Hely J said at 509 [53]:

“There is no general principle or rule of law in contempt cases that a successful applicant is routinely awarded costs on an indemnity basis, or solicitor and own client basis: Australian Competition and Consumer Commission v World Netsafe Pty Ltd. However, such orders are commonly made. In Sony Computer Entertainment Australia Pty Ltd v Johnston and in Australian Competition and Consumer Commission v Australian Taxation Information Services Pty Ltd costs were awarded on a solicitor and own client basis. In Sony Computer Entertainment Australia Pty Ltd v Dannoun costs were awarded on an indemnity basis, that is all the costs of and incidental to the motion except any costs unreasonably incurred and costs unreasonable in amount.

(Citations omitted)

The applicants submit that indemnity costs are appropriate in this case and rely upon the failure of the respondents to reply to the letter of 5 August 2013. The respondents, in contrast, rely upon the fact that any contempt is now purged and that steps were taken on 5 August 2013 to cancel registration of the domain names which had not been cancelled by 2 August 2013 in contravention of the consent orders made on 21 June 2013. They submit that the contempt of the 23 March 2012 orders was effectively purged immediately upon Mr Grassia becoming aware of the fact that the user manuals were on the Viano website. Ms Cavalli gave evidence that she was informed by her husband that the user manuals were on the Viano website on, or about, 6 August 2013 and that she immediately instructed Mr Fazio to remove them on 7 August 2013.

37    I do not consider this to be a case where it is necessary for penalties to be imposed. I do, however, consider this to be a case where costs on an indemnity basis should be ordered against the respondents. I accept that the contempt was not due to conduct amounting to “defiance” on the part of Mr Grassia or, through him, of any of the other respondents. It was caused by inexcusable neglect, carelessness and dereliction of an obligation to comply with a court order. Both a lack of defiance and an inexcusable dereliction of obligation may be seen simultaneously in Mr Grassia’s conduct when he sought to comply with orders on 5 August 2013 after becoming aware of the letter from the applicants’ solicitors and later upon the issue by the applicants of these proceedings for contempt. His conduct did not seek to defy the court order but carelessly and ineptly purported to comply with it. He attempted to cancel the registrations and succeeded in doing so with one registration but not with the other. He then failed to ensure that the registrations were cancelled and failed in his duty under s 37N of the Federal Court Act by not responding to the applicants’ solicitors or otherwise informing the applicants’ solicitors of his attempts. His failure continued in September after he had become aware of these proceedings which could have been brought to an end quickly had he attended to his obligations as a litigant himself, as the Vivo director which had been a litigant and a director of the other companies which had been joined as respondents to proceedings for contempt. Ultimately, it was not until the Friday before the hearing of the contempt proceedings that one of the domain names was successfully cancelled. Mr Grassia insisted that he did not fully appreciate the precise issue being agitated on the part of the applicants and insisted that he genuinely believed the dispute to be about the breach which had admittedly occurred between 2 August and 5 August 2013. It is difficult to see how he could have had such a belief in view of the clear terms of the correspondence and the proceedings other than by his failure to give the matters the attention they required. That is true also of the breaches of the order of 23 March 2012 which was purged around 7 August 2013 by the instruction given by Ms Cavalli to Mr Fazio. Proper attention by Mr Grassia to these matters would have prevented the breaches from occurring and proper communication to the applicants’ solicitors would have avoided the need for the applicants to bring proceedings upon a basis which they reasonably apprehended on the material as known to them had compounded the contempt in what could have reasonably have been understood by them to be defiant silence.

38    Accordingly, I make the following orders:

1.    It be declared that the first respondent is guilty of contempt by reason of the matters set out in charges 1, 2 and 6, laid against it in the Statement of Charge filed on 10 September 2013.

2.    It be declared that the second respondent is guilty of contempt by reason of the matters set out in charges 3, 4 and 7, laid against it in the Statement of Charge filed on 10 September 2013.

3.    It be declared that the third respondent is guilty of contempt by reason of the matters set out in charge 8, laid against it in the Statement of Charge filed on 10 September 2013.

4.    It be declared that the fourth respondent is guilty of contempt by reason of the matters set out in charge 9, laid against it in the Statement of Charge filed on 10 September 2013.

5.    The respondents pay the applicants’ costs in the contempt proceeding on an indemnity basis.

Associate:

Dated:    12 December 2013