FEDERAL COURT OF AUSTRALIA

Kazal v Thunder Studios Inc (California) [2017] FCA 238

ORDERS

THE COURT ORDERS THAT:

1.    The hearing of the appeal be expedited.

2.    The interlocutory application filed by the appellant on 2 March 2017 otherwise be dismissed.

3.    The appellant pay the respondents’ costs as agreed or taxed.

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

REASONS FOR JUDGMENT

1    On 11 November 2016 orders were made by consent restraining the appellant, Adam Kazal, from publishing allegedly defamatory material about the second respondent, Rodric David, the chairman and chief executive officer of the first respondent, Thunder Studios Inc. (California). On 21 December 2016 the primary judge found that the appellant had breached a number of those orders and that for this and other reasons he convicted him on six counts of contempt of court. On 27 February 2017 his Honour sentenced the appellant to imprisonment on all six counts, to be served concurrently. The effect of those sentences is that the appellant would serve a total of 18 months imprisonment. The appellant has filed a notice of appeal, claiming that both the convictions and the sentences were affected by various errors, and seeks orders setting them aside. By an interlocutory application, supported by affidavits sworn by his solicitor, Douglas Bishop, and his wife, and in reliance on material placed before the primary judge in the sentencing hearing, he seeks orders staying all the Court’s orders and releasing him from gaol pending the determination of the appeal or until further order of the Court (in effect, admitting him to bail). He also seeks an order that the appeal be expedited.

2    For the reasons that follow, the hearing should be expedited but the interlocutory application should otherwise be dismissed.

Background

3    The events the subject of the judgments below apparently arose out of the breakdown of a business relationship between the appellant’s brother, Charif, and the second respondent Rodric David and another man with whom he was associated, David Singh. On 15 August 2014 the respondents sued the Kazal brothers alleging that, on a website owned and operated by Charif at the URL www.kazalfamilystory.com (the Kazal website), elsewhere on the internet, in emails, on Facebook, and in tweets, they had both made representations that were defamatory, amounted to injurious falsehoods, and were misleading or deceptive in contravention of s 18 of the Australian Consumer Law contained in Sch 2 to the Competition and Consumer Act 2010 (Cth). They applied for damages and a permanent injunction restraining further publications of the representations on the website.

4    In October 2016, while the application was pending, the appellant sent two emails, the first to Mr David, copied to Charif and another brother, Tony Kazal, as well as a number of people at Thunder Studios, and the second to the solicitor acting for Mr David on the application, Walter MacCallum (the October emails).

5    In the first email, sent on 28 October 2016, which the appellant also posted on his Twitter account, the appellant accused Mr David of having defrauded companies that Mr David owned with Charif and Tony, of having lied to an inquiry conducted by the Independent Commission Against Corruption (ICAC), of being responsible for the publication in The Sydney Morning Herald of lies about members of the Kazal family, and of using articles in that newspaper to “steal the $180 million company [Mr David] owned with Charif & Tony … with help on the theft from CEO David Singh”. The appellant threatened on Twitter and in the email to publicly expose Mr David. The email also contained what the primary judge described as a vitriolic attack on Mr David and his racial background. The email concluded:

You start a fight with me, I will show you how Adam Kazal is different to the rest of the family.

See you around grub.

6    It seems that the appellant carried out his threat to expose Mr David. Amongst other things, he used a van emblazoned with references to the alleged theft, carrying large photographs of Mr David, describing him as “the corporate thief”, warning others not to be “his next victim”, and inviting people to go to the Kazal website, the URL of which was prominently displayed, to “read the whole story”.

7    In the second email, sent on 31 October 2016, the appellant made a series of allegations against both Mr David and Mr MacCallum. They included:

Regarding the van, do you seriously claim to be a lawyer? You are the same person as I recall that orchestrated and fabricated the ICAC case with Rodric David just to create a smokescreen for his highway robbery. That makes you nothing more than a common thug and liar fabricating claims to enable this man to steal from innocent victims. Is that what a lawyer does? I don't think so.

You want me to cease using the Van? Are you serious?

8    The appellant proceeded to warn Mr MacCallum that, unless Mr David met certain demands (which included paying into his bank account, details of which were included in the email, the sum of $666,666.66) he “reserve[d] the right” to continue to use the van, to increase the size of the fleet, and “to do whatever is necessary to expose” both Mr David and Mr Singh and all those who “aided and abetted” them. He added:

For the avoidance of any doubt, that includes you too Sir.

9    On 4 November 2016 orders were made ex parte enjoining the further publication of apparently defamatory material of and concerning Mr David, including publications displayed on vans that had been seen around Sydney. Those orders were served on the appellant. On 11 November 2016 the matter came before the primary judge. Both the appellant and the respondents were represented by senior and junior counsel and a solicitor and further restraining orders were made by consent (the 11 November 2016 orders). Charif’s solicitor also appeared.

10    By order 1, until the final disposition of the proceedings, the appellant was enjoined from

posting, fixing or displaying, or directly or indirectly causing to be posted, affixed or displayed on any structure, building, signpost, pole, wall, mobile or immobile structure, or to any motor vehicle, any kind of sign, placard, poster, banner, pamphlet, flyer or any like item, or otherwise publishing or distributing any such material, whether or not displaying images or likenesses of Rodric David or any members of his family, where such object may be or is in fact visible distributed to the public or any member of the public and which:

a.    is in the form of or to the same or similar effect as the sign or poster, a copy of which [was annexed to the order as “Annexure A”]; or

b.    makes, conveys, or is capable of making or conveying any imputation that Rodric David:

A.    is a corporate thief;

B.    stole $180 million;

C.    is guilty of fraud;

D.    is a con man;

E.    conspired with David Singh to steal $180 million;

or any imputation to the same or similar effect.

(Emphasis added.)

11    By order 2, until final disposition of the proceedings, the appellant was restrained from “retaining, hiring, engaging or directing any person to carry out any of the conduct referred to in order 1.

12    By order 3, until final disposition of the proceedings, the appellant was restrained from “publishing or distributing (otherwise than to his lawyers for the purpose of obtaining legal advice or for use in litigation), in hardcopy or electronic form, whether on the internet or any form of social media, including Twitter”:

(a)    the material contained in the second email;

(b)    the material contained on the appellant’s Twitter feed entitled: “Hey Walter MacCallum: You want me to cease using the Van? Are you serious?”;

(c)    material located on the internet incorporating the first email and the threat made the same day on the appellant’s Twitter account that the appellant’s “team in LA” were going to expose Mr David wherever he went;

(d)    a video entitled “Street protests and vans exposing corporate thieves Rodric David and David Singh” displayed on YouTube and the Kazal website; and

(e)    any imputation arising from any material (whether in hardcopy or electronic form) published on or after 26 October 2016 but Mr David alone or together with his legal representatives:

A.    fabricated a case before the ICAC;

B.    perverted the course of justice;

C.    is guilty of contempt of the ICAC

E.    lied to the ICAC

F.    engaged in thuggery, to enable him to steal from innocent people;

G.    lied, to enable him to steal from innocent people;

H.    fabricated claims, to enable him to steal from innocent people;

I.    is a thief.

or any imputation to the same or similar effect.

(Numbering as in original.)

13    By order 4, by 4pm AEST on 12 November 2016, the appellant was required to remove or cause to be removed from the internet, Twitter; and any third party website to which it was distributed, the material referred to in order 3.

14    Yet, each day from 15 to 21 November 2016 inclusive the appellant posted on his Twitter account emails he had sent to The Sydney Morning Herald journalist, Kate McClymont (the seven tweets). None of the tweets referred directly to Mr David. Rather, they made allegations against Mr Singh in the same or similar terms to the allegations made against Mr David, the subject of the 11 November orders, and directed readers to the Kazal website (in one case with a hyperlink to the website) where they could read “all the facts”. In addition, the appellant dispatched four vans around Sydney purporting to “expose” Mr Singh as “the corporate thief” who “robbed his business partners of $180 million”, threatened to expose “all involved”, and inviting people to read about it on the Kazal website “c/-Adam Kazal”.

15    In the period between 11 and 21 November 2016 22 posts were added to the Kazal website containing material vilifying both Mr David and Mr Singh. In the posts, both were referred to as “corporate thieves”. Mr David was described as a liar, a cheat, a thief and a fraud (11 November, 21 November), a criminal and “a shameless thief” (12 November), “a serial fraudster & thief who thought he got away with his crimes” (15 November), and “a lowlife” (16 November). He was accused of deceiving the ICAC (16 November), and making a false complaint to the ICAC (17 November). He and Mr Singh were described as “co-conspirators” (17 November). Two posts on 21 November carried photographs of Mr David captioned: “Rodric David The Corporate Thief”.

16    Furthermore, on 8 December 2016 the video the subject of the 11 November 2016 orders was still accessible on the Kazal website. The evidence before the primary judge was that typing “van” into the search box brought up the result “street protests and vans exposing the corporate thieves Rodric David and David Singh” and when that link was followed it led to the video, which could be watched in its entirety. Screenshots in evidence before the primary judge show that the video was posted on 5 November 2016. These screenshots included photographs of posters and signs with captions “Rodric David” or “David Singh”, and other photographs of Mr David and Mr Singh under the heading “The Corporate Thieves”, next to which was a sign in large letters stating: “ROBBED their business partners of $180 million”.

17    On 20 December 2016 the respondents filed an amended statement of charge alleging multiple breaches of orders 1, 3 and 4 and additionally charging him with two counts of making public statements intended and calculated to influence a party in the conduct of pending proceedings and which exposed a party to the risk of prejudgment of the issues or merits of those proceedings.

The decisions of the primary judge

18    The primary judge acquitted the appellant of charges 1, 2 and 4 but found him guilty of charges 3, 5, 6, 7 (in part), 8 and 9 and sentenced him to the following terms of imprisonment to be served concurrently:

(a)    15 months on charge 3;

(b)    9 months on charge 5;

(c)    2 months on charge 6;

(d)    2 months on charge 7;

(e)    12 months on charge 8; and

(f)    18 months on charge 9.

19    Charge 3 alleged that the appellant had breached orders 1 and 3 by including on each van the words identified in charge 1, being words directing readers to the website on which one or more of the 22 posts had appeared.

20    Charge 5 concerned the seven tweets addressed to Ms McClymont. It charged that orders 1 and 3 of the 11 November 2016 orders had been breached by including in the tweets words directing readers to visit the website on which the various posts were published.

21    The primary judge was satisfied beyond reasonable doubt that the use of “the apparent hyperlink” to the website in the seven tweets and the appearance of the website’s address on the vans constituted a republication of all of the contents of the website (relying, in particular, on the Privy Council’s judgment in Buchanan v Jennings [2004] 1 AC 115) and of each of the 22 posts, and that all 22 posts were published to Mr MacCallum, who gave unchallenged evidence on this question.

22    His Honour also found that the appellant was aware that the Kazal website contained material relating to Mr David in the 22 posts that conveyed, and was capable of conveying, each of the proscribed imputations referred to in orders 1(b) and 3(e) A, E, G, H and I.

23    Charge 6 charged that since 11 November 2016 the appellant had breached order 3(d) by continuing to publish the video on the internet.

24    Charge 7 charged that since 11 November 2016 the appellant had breached order 4 by failing to remove from the internet, Twitter and “any third party website to which it had been distributed” the material referred to in order 3.

25    The primary judge considered these charges together. His Honour rejected the appellant’s submissions that the failure to remove the offending material from the Kazal website was beyond his control and that the respondents had not proved that he had power to do more than he had done, which was to have his solicitor send an email to Charif’s solicitor. His Honour was satisfied beyond reasonable doubt that the appellant was the publisher, that the order was breached, and that the publication of the video and its availability for download on the website remained unchanged since the 11 November orders were made. He held that, by consenting to order 3(d), the appellant had admitted to being the publisher of the video in that his consent and the order acknowledged, in terms, that he had control over its publication on the two sites: YouTube and the Kazal website. His Honour said that there was no evidence that the appellant did anything to check whether Charif or anyone else had complied with his solicitor’s request or whether the request had been acted on or that there was any difficulty with compliance. He was also satisfied beyond reasonable doubt that the appellant agreed to orders 3(d) and 4 because he could stop the publication of the video on the website and cause its removal and that he “had the capacity to cause that to happen”. He found that the email from his solicitor to Charif did not “amount to [the appellant] using his best endeavours to comply with the orders or … cast any evidentiary onus, if there be one, back onto the [respondents] to demonstrate, to the extent that [the appellant]’s consent to orders 3(d) and 4 did not establish it, that removal of the material was within [his] capacity”.

26    Charge 8 charged that during the period between 31 October and 11 November 2016 the appellant had made public statements intended and calculated to influence a party in the conduct of pending proceedings and which exposed a party to the risk of prejudgment of the issues or merits of pending proceedings.

27    Charge 9 was to the same effect but related to the period since 11 November 2016.

28    The primary judge was satisfied beyond reasonable doubt that, when the appellant sent and posted on his Twitter account each of the October emails, he knew of the substantive issues in the proceedings and that “the applicants” (the present respondents) were pursuing the substantive proceedings because he was a respondent to those proceedings. His Honour noted that each of the emails was expressed in “very threatening terms” and that the 31 October email publicly (by its publication on Twitter) accused Mr MacCallum of being party to a conspiracy to pervert the course of justice. He was satisfied beyond reasonable doubt that “the nature of the threats and accusations against Mr MacCallum in the 31 October publication had the tendency to intimidate him in relation to his association with, and acting for, [the respondents]” and that each of the October publications “had the tendency to interfere, in a serious and deliberate way, with the administration of justice by seeking to bring improper pressure to bear on [the respondents]” and, in the case of the 31 October publication, on Mr MacCallum, “in relation to their conduct or wish to pursue the principal proceedings”. For these reasons he found the appellant guilty on charge 8.

29    His Honour found the appellant guilty on charge 9 because he was satisfied beyond reasonable doubt that the appellant knew that the publication of the website address on the vans and in the seven tweets “would take any person who went to the website to material in it that published the very things he had threatened to do in the 31 October publication, namely, to allegations about Mr David and his alleged theft of $180 million in association with Mr Singh”. He said that the appellant’s escalation of activity, such as by increasing the number of vans from one to two and then four, causing them to be parked in the city of Sydney, displaying the references to Mr Singh as a corporate thief, and inviting viewers to visit the website, together with the contents of the seven tweets, demonstrated beyond reasonable doubt that the appellant’s conduct “constituted a contempt by bringing of improper pressure on the [respondents] that had the tendency to obstruct the administration of justice.

30    His Honour concluded his first judgment by foreshadowing a custodial sentence.

31    In his second judgment, in which he sentenced the appellant, his Honour made findings that the appellant’s conduct was contumacious in that it amounted to wilful defiance of court orders. Specifically, he found that the conduct involved in charge 3 “constituted a deliberate and very serious flouting … of orders 1 and 3 made on 11 November 2016 … [and] a very public defiance of the authority of the Court and the 11 November orders”. He continued:

It was a contumacious and serious contempt of a criminal nature. Wilful disobedience of a Court’s order, occurring in circumstances of public defiance, as here in each of the four breaches and in count 9, involves a public injury and calls into play the Court’s penal or punitive jurisdiction to deal with criminal contempt …

32    His Honour described the conduct constituting the contempt in charge 5 to be “an act of public defiance of the 11 November orders”. Noting that the followers of the appellant’s Twitter account doubled to around 25,000 during the conduct complained of and have remained at that level, his Honour found that a large number of those people would have visited the website.

33    His Honour considered that charges 6 and 7 “related substantially to one cognate course of conduct”. He held that the appellant’s failure to take appropriate steps to ensure that the video had been removed from the website and the “deliberate promotion of visits to the website” amounted to a wilful defiance of orders 3(d) and 4 and so was also contumacious, though less serious than the other four contempts.

34    As for charges 8 and 9 his Honour said that the appellant deliberately set out to intimidate Mr David in each of the October publications and Mr MacCallum in the second October publication and that there was no doubt he intended at the time of writing and posting each of the publications that it would bring improper pressure on the respondents and, in the latter case, Mr MacCallum. He was also satisfied beyond reasonable doubt that the appellant’s conduct after 11 November 2016 was a deliberate and public defiance of the orders made on that day.

35    It is unnecessary for present purposes to delve into the reasons for sentence at any great length. Suffice it to say that the primary judge considered whether the appellant should be fined and whether to impose a suspended sentence but decided that only a custodial sentence was appropriate. In substance, his Honour considered the appellant’s conduct was very serious and that there were no mitigating factors. He noted that the appellant “chose to persist in a strategy to ‘expose’, as [he] saw it, Mr David while contriving to circumvent the effect of the 11 November orders by omitting his name and photograph …”. His Honour said that the appellant had shown no respect for the Court’s orders, no remorse, and no respect for the right of the respondents to litigate their dispute with him and his brother on its merits. His Honour considered that the appellant had “some prospects of rehabilitation following any custodial sentence” but had difficulty accepting that the appellant was a generally law abiding citizen, despite the opinions of referees to that effect, when, though a bankrupt for six years, he had never filed a statement of affairs. His Honour also noted that the source of the resources necessary to finance his apparently comfortable lifestyle and to fund the vans and the drivers and others used in the campaigns waged against Mr Rodric and Mr Singh was not the subject of evidence. His Honour took into account evidence that a custodial sentence would have “a significant impact” on the appellant’s wife and children and evidence, weak though it was, about the appellant’s mental state.

The appeal

36    The principal errors pleaded in the notice of appeal are as follows:

(1)    as to the convictions on charges 3, 5 and 9, in finding that the placement on the vans of the URL of the website where the 22 posts were published was itself a publication of the contents of the website (grounds 1–4, 11–12);

(2)    as to the convictions on charges 6 and 7, in finding that the appellant had admitted that he was the publisher of the video because his counsel had consented to the orders and thereby acknowledged that he had control over the publication of the video (grounds 5–8);

(3)    as to the conviction on charge 8 (grounds 9–10):

(a)    in failing to find that, having regard to the context in which the 28 and 31 October publications were made, there was no basis to conclude beyond reasonable doubt that the appellant intended to put improper pressure on the respondents and Mr MacCallum or that those publications had the tendency to interfere with the administration of justice by seeking to put improper pressure on them; and

(b)    in failing to find, in the circumstances of the case, that the October publications did not involve a real risk (as distinct from a remote possibility) that they would interfere with the course of justice in the proceedings;

(4)    as to the sentence appeal (grounds 13–16):

(a)    in finding that it was open to sentence the appellant on the basis that the contempts found were contumacious when there was no basis to conclude beyond reasonable doubt that the appellant understood that the orders prohibited him from publishing the URL address of the website;

(b)    that the sentences were manifestly excessive both individually and in totality; and

(c)    in finding that there was no evidence of remorse.

The power to grant a stay pending the hearing and determination of an appeal

37    Rule 36.08 of the Federal Court Rules 2011 (Cth) relevantly provides that an appeal does not operate as a stay of execution or of any proceeding under the judgment the subject of the appeal but an appellant may apply to the Court for an order to stay the execution of the proceeding until the appeal is heard and determined. By r 1.41 the Court has the power to make or refuse such an order or to make a different order.

38    The power may be exercised by a Full Court or a single judge: Federal Court of Australia Act 1976 (Cth) (FCA Act), s 25(2B)(ab).

The power to release the contemnor

39    There is no utility in staying the sentences unless the appellant is also released from prison or admitted to bail and there are potential problems in granting bail unless the sentences are also stayed (see, for example, Parker v Director of Public Prosecutions (1992) 28 NSWLR 282 at 298ff). Thus, the two questions are inextricably linked. Indeed, in Siminton v Australian Prudential Regulation Authority (No 2) [2008] FCAFC 112 at [29] Spender ACJ expressed the view that there was “no crucial difference” of principle between an application for bail and an application for a stay of an order requiring a person to serve a term of imprisonment.

40    I do not doubt that the Court has the power to order the appellant’s release from custody or, put differently, to admit the appellant to bail or dispense with bail. The more difficult question is to identify the source of that power.

41    In United States of Mexico v Cabal (2002) 209 CLR 165, an extradition case, the High Court observed at [37]:

In our view, the power to grant bail in a criminal or extradition case is an incident of the power conferred by s 73 of the Constitution to hear appeals from the orders of certain courts. It is not a question of inherent jurisdiction. The grant of judicial power carries with it authority to do all that is necessary to effectuate its main purpose. Because that is so, the Court has authority to do all that is necessary to effectuate the grant of appellate jurisdiction conferred by s 73 of the Constitution. It therefore has power to stay orders that are or may become the subject of its appellate jurisdiction. If the Court did not have power to stay an order the subject of an appeal, it might fail to do full justice to the appellant or potential appellant.

(Footnote omitted.)

42    Despite what the Full Court said in Construction, Forestry, Mining and Energy Union v Director, Fair Work Building Industry Inspectorate (2014) 225 FCR 210 at [7] and [39], contempt is not a criminal proceeding: Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd (2015) 256 CLR 375(CFMEU v Boral) at [35], [65].

43    Nevertheless, a criminal contempt is a common law offence: CFMEU v Boral at [65] (Nettle J). See also Hinch v Attorney-General (Vic) (1987) 164 CLR 15 at 89 (Mason CJ, Wilson, Deane, Toohey and Gaudron JJ). Does that mean that Pt VIB of the FCA Act (which provides for bail) or the Bail Act 2013 (NSW) applies?

44    Part VIB only applies during “indictable primary proceedings or criminal appeal proceedings” and this is neither an “indictable primary proceeding” nor a “criminal appeal proceeding”. But the position is not so clear cut in relation to the Bail Act.

45    Of course, the only way the Bail Act could apply is if it were picked up by s 79(1) of the Judiciary Act 1903 (Cth): see, for example, John Robertson & Co Ltd (In liq) v Ferguson Transformers Pty Ltd (1973) 129 CLR 65 at [88] (Gibbs J), [94]–[95] (Mason J); Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at [591] (Gleeson CJ, Gaudron and Gummow JJ).

46    It is unnecessary, however, to consider whether the Bail Act is picked up by s 79(1) of the Judiciary Act unless the Bail Act applies to an application for release from custody following a conviction for contempt of court.

47    In Regina v Duncan [2000] NSWSC 891 O’Keefe J considered that the Bail Act 1978 (NSW) applied to the question of bail pending an appeal in a contempt matter and in R v Mahaffy [2016] NSWSC 1085 Rothman J granted bail under the current Bail Act. In Prothonotary of the Supreme Court of New South Wales v Jarvie [2017] NSWSC 192, however, Garling J was “not presently persuaded” that an application to release a contemnor from custody, subject to strict conditions, was an application for bail under the Bail Act.

48    Section 90 of the Bail Act 2013 (previously s 64 of the 1978 Act) provides:

90 Bail for contempt not affected

(1)    This Act does not affect any power or duty that a court, tribunal or person has to grant bail, or to grant relief in the nature of bail, for any contempt or alleged contempt.

(2)    Any such power or duty is additional to any power or duty that a court, tribunal or person may have under this Act in relation to any contempt or alleged contempt.

(3)    This section does not apply to a contempt or alleged contempt that constitutes an offence and proceedings for which may be commenced by way of information or complaint.

49    On one view, s 90 contemplates that in a contempt case any powers and duties to grant bail (or relief in the nature of bail) are in addition to, and not in substitution for, the powers and duties conferred by the Bail Act. The only exception is where criminal proceedings for an offence of contempt have been instituted. In the latter case, the intention is that the Bail Act only applies.

50    There is dictum, however, in Matthews v Australian Securities and Investments Commission [2009] NSWCA 155 to indicate otherwise. That was a case of civil contempt where it was assumed that the court had the power to grant bail but refused to do so. Basten JA expressed the opinion at [188] that the Bail Act did not apply “in terms” to a committal for civil contempt or affect a power to grant bail with respect to criminal proceedings for contempt. His Honour noted that the Act abolished common law powers to grant bail (in s 62) but said that the abolition did not operate because it expressly referred to the power (or duty) to grant bail “to an accused person in or in connection with criminal proceedings”.

51    I invited the parties to address this question in their submissions. Both submitted that the Bail Act did not apply. The appellant drew attention to Basten JA’s remarks in Matthews, to which I had directed them, noting that Rothman J in Mahaffy (who mentioned the judgment in other respects) did not refer to them. The appellant also emphasised the auxiliary verb “may” in s 90(2) of the Act.

52    While the question is not free from doubt, I conclude that the better view is that the Bail Act does not apply. In Vu v New South Wales Police Service [2007] FCA 1192 Rares J, who did not refer to the NSW legislation, considered that the matter was governed by the Court’s power to stay the operation of a sentence. I respectfully agree.

The exercise of the discretion

53    The Court’s discretion to grant a stay is broad but guided by a number of general principles. In civil cases the principles outlined below are well established: see esp Alexander v Cambridge Credit Corp Ltd (Receivers Appointed) (1985) 2 NSWLR 685 at 694–5; Maher v Commonwealth Bank of Australia [2008] VSCA 122 at [27]; and Powerflex Services Pty Ltd v Data Access Corporation (1996) 67 FCR 65 at 66.

54    The starting point is that the judgment is presumed to be correct and the successful party is entitled to its benefits — to what are sometimes referred to as “the fruits of victory”. An applicant must demonstrate a proper or appropriate basis for a stay that will be fair to all parties. It is not enough that a notice of appeal has been filed. Where the applicant “has left the situation in the state of speculation or of mere argument, weight must be given to the fact that the judgment below has been in favour of the other party”: Re Middle Harbour Investments Limited (in Liquidation), NSWCA, 15 December 1976, unreported, per Mahoney JA.

55    Second, in the exercise of its discretion the Court will weigh the competing rights of the parties and the balance of convenience.

56    Third, the Court will not generally speculate on the prospects of the appellant’s success on the appeal, but, in determining the parties’ rights and where the balance of convenience lies, it will make a preliminary assessment as to whether the appellant has an arguable case.

57    Fourth, where there is a risk that the appeal will be rendered nugatory unless a stay is granted, courts will normally exercise their discretion in favour of granting a stay.

58    Fifth, it is not necessary for special or exceptional circumstances to be shown.

59    The appellant relied on these principles.

60    The process for the resolution of a contempt proceeding is a civil hearing, not a criminal trial: Witham v Holloway (1995) 183 CLR 525 at 534. Nevertheless, where there is a finding of criminal contempt leading to conviction and imprisonment and where the stay is sought in conjunction with an order that the contemnor be released from custody pending the determination of the appeal, there is reason to believe that the applicant’s task is more onerous than it would be in an ordinary civil case. I shall return to this question shortly.

The appellant’s arguments

61    The appellant submitted that the balance of convenience favours a stay (and his release from custody).

62    First, he contended that the appeal will be nugatory, in whole or in part, if the appellant succeeds. In his affidavit, Mr Bishop pointed out that, if the appeal is not heard before May, The appellant will have been incarcerated for at least two months of an 18-month sentence and that, if the appeal is allowed, he will have been incarcerated for more than that, something “which will by then be irredeemable” thereby rendering the appeal, “at least in respect of the [two month] sentences imposed on charges 6 and 7” entirely futile.

63    Secondly, he claimed that there is no prejudice to the respondents if a stay were to be granted. He argued that in a case such as this the concept of the respondents being “deprived of the fruits of victory” is meaningless. He submitted that the respondents are not prosecutors but private litigants engaged in adversarial litigation, pursuing their own interests, and their opposition must be seen in this light.

64    Thirdly, he submitted that the effect of the appellant’s imprisonment on his family is “acute”.

65    Fourthly, he contended that his grounds of appeal are strong, or at least reasonably arguable, both on liability and sentence.

How should the discretion be exercised?

66    I am not persuaded that the orders the appellant seeks should be made.

67    First, I do not accept that, absent the grant of a stay and the appellant’s release from prison during its currency, the appeal would be nugatory. A similar submission was put and rejected in Siminton.

68    In that case an application had been made by a man who had been sentenced to twelve months’ imprisonment for contempt of court and who had indicated his intention to apply for special leave to appeal to the High Court. Spender ACJ, who heard the application, rejected the submission that, if a stay were not granted, the applicant’s right to seek special leave to appeal, and, if granted, to appeal against the orders finding him liable for contempt and sentencing him to 12 months imprisonment would be rendered futile

69    As Spender ACJ observed in Siminton at [47]:

[T]he fact that he will serve up to two months’ imprisonment before the determination of his special leave application is little different to the situation of persons whose appeal to a Court of Appeal in respect of a criminal sentence has been unsuccessful. The possibility that, should the proposed appeal be ultimately successful, the person will have served a period of imprisonment, relatively short compared with the total period of the sentence, (for which imprisonment was, in the end result, not warranted), does not provide a basis for the grant of bail or for the stay of the order ordering imprisonment.

70    Here, since the application was made, a Full Court has been constituted to hear the appeal on 6 April 2017 and it is highly likely that the Court will give judgment swiftly thereafter, if not on the day itself.

71    In his affidavit, Mr Bishop asserted that the appellant’s continued incarceration “will hinder” his ability to provide proper instructions on “matters relevant to the appeal”. This assertion is difficult to understand, given the nature of the appeal. Mr Bishop stated that “one such matter is my instructions to liaise with the Appellant’s trustee in bankruptcy for the purpose of identifying and, if possible, remedying the breaches of his obligations to the trustee,” “breaches”, it will be recalled that have been ongoing for six years. What the appellant’s bankruptcy obligations have to do with the appeal is obscure. So, too, is the notion that the appellant’s incarceration interferes with Mr Bishop’s ability to liaise with the trustee.

72    Mr Bishop’s affidavit contains a second-hand account of the impact of the sentence on family members. Evidence on the impact on the immediate family was also given by the appellant’s wife. None of this evidence was challenged and I take it into account. To some extent, however, their suffering appears to have been due in part at least to the appellant’s failure to forewarn them that he might be imprisoned. Although the primary judge told him in no uncertain terms when pronouncing judgment on 21 December that a custodial sentence was likely, he failed to pass this information on to his wife until four days before the sentencing hearing. That appears to have caused her to suffer a panic attack resulting in an overnight hospital admission. Since her husband was sentenced, she has been understandably distressed and anxious. She has been prescribed anti-anxiety medication by her GP and has been referred to a psychologist. She is also troubled by having to tell her two youngest children, aged 5 and 7, about their father’s plight. Moreover, she is worried about the effect it will have on their older sons, aged 16 and 17, who are studying for the International Baccalaureate. The custodial sentence is also inconvenient to her in a number of respects.

73    The appellant also relied on a report from a social worker, Ms Mohini Prasad, which was received by the primary judge on the sentence and admitted as character evidence. It was tendered in support of the present application apparently as a means of placing before the Court the history given by the appellant to Ms Prasad since their first meeting in November 2011. No objection was taken to the tender of the report and no order sought under s 136 of the Evidence Act 1995 (Cth) to limit the use which could be made of the appellant’s history. I therefore take it into account, too, to the extent that it is relevant. But the report also contains opinions about the appellant’s mental health. That evidence was plainly outside the author’s expertise and, although the primary judge took it into account on sentence, I give it little weight. Nevertheless, I have no doubt that the appellant is distressed to find himself in prison and that he wants his freedom. This is an inevitable consequence of a custodial sentence. Moreover, I accept that he is worried about his family. This, too, is only to be expected. What is telling about the report, however, is that it contains no support for the notion that the appellant has any remorse for his actions.

74    I reject the appellant’s submissions as to the absence of prejudice to the respondents if the orders are not made. While the appellant remains in custody, he is constrained from continuing his attacks against Mr David.

75    I also reject the appellant’s submissions to the effect that this is merely a dispute between private litigants who are pursuing their own interests. Although this is a civil matter, this is no ordinary civil case. The conduct in which the appellant engaged concerns the public interest in the administration of justice and it is the public interest which the orders protect. As the primary judge put it in his opening remarks on sentence:

It is a very serious matter where a person disobeys a Court order knowing the Court has made it. If that conduct went unpunished by the Courts, a fundamental aspect of our society would suffer. Other people would come to think that they also could disobey or flout orders that a Court had made. The rule of law would be seriously undermined were such a situation left unpunished. Justice could not be done satisfactorily if the ordinary respect that members of our society have for the authority of the Courts to resolve disputes, as a part of our system of government, came to be undermined by persons openly disobeying Court orders or bringing public pressure on a litigant in proceedings that sought to influence the litigant or condemn him, her or it in the public eye for pursuing or defending the litigation.

76    In such a case, the public interest is entitled to significant weight: cf. Wooldridge v Australian Securities and Investments Commission [2015] FCA 349; 106 ACSR 551 at [15].

77    In Cabal at [39] the High Court observed that it is “a serious interference with the due administration of criminal justice” to stay an order for imprisonment before deciding an appeal. The Court cited with approval the remarks of Thomas J in Ex parte Maher [1986] 1 Qd R 303 at 310 that to allow bail pending the hearing of an appeal after a person has been convicted and imprisoned makes the conviction appear contingent until confirmed; places the court in the invidious position of having to return to prison a person whose circumstances may have dramatically changed while at liberty on bail; encourages unmeritorious appeals; and undermines respect for the judicial system by the public spectacle of the “recently sentenced man walking free” and the public interest in having convicted persons serve their sentences as soon as is practicable. Similar observations were made in in Wooldridge at [18] where public interest considerations were involved. In that case, Middleton J said that the Court should not give the impression that disqualification orders are provisional until confirmed on appeal, “lest the public purpose of making such orders be undermined”.

78    These observations could equally be made of an application for a stay of a sentence of imprisonment for contempt of court.

79    In my opinion, the Court should be hesitant to stay a prison sentence for criminal contempt and grant bail pending the determination of an appeal from those sentences. While I would not go so far as to find, as the respondents urged, that exceptional reasons are required, good cause should be shown.

80    Certainly, a strong appeal would be a powerful factor in favour of the grant of a stay.

81    The appellant submitted that his prospects of success were strong but, apart from outlining his argument, he did not attempt to persuade the Court of its merits and I am not so persuaded. On an application such as this, it is inappropriate to say much about the prospects of success on appeal as the argument can never be fully developed and the Court can therefore only form “a broad overall view of an applicant’s apparent prospects”: Obeid v R (No2) [2016] NSWCCA 321 at [17]. What I can say is that the submissions, though eloquent, did not engage with the authorities on which the primary judge relied to make his critical findings of guilt in relation to charges 3 and 5. Further, while arguing that the sentence was “disproportionate”, “outside the range”, and “excessive”, they failed to refer to the sentence of two years for contempt fixed by the Full Court in Vaysman v Deckers Outdoor Corporation Inc (2014) 222 FCR 387 upon which his Honour drew.

82    Moreover, I consider the proposition that the consent to order 3(d) of the 11 November 2016 orders was not a proper or adequate basis for the finding that the appellant had admitted that he was the publisher of the video to be weak at best. Quite apart from the compelling logic of his Honour’s approach, there is authority to support it: see, for example, Australian Competition and Consumer Commission v Dynacat (Int) Pty Ltd (formerly Phoneflasher.com Pty Ltd) [2007] FCA 429. In that case, Finn J found that a company was in contempt of court in failing or refusing to comply with a court order which required it to place a notice on a website described in the orders as the company’s website and any other website it used to promote a particular mobile telephone accessory — despite the fact that he was not satisfied that the company was capable of complying with the order. He did so on the basis of consent orders into which the company had entered,

83    On the other hand, with one exception, I accept that the grounds of appeal are at least arguable. The exception relates to ground 16, which alleges that the primary judge “erred in law in finding that there was no evidence of remorse”. Not only did the appellant not give evidence, but not one of the letters, statements, or affidavits from supporters or family members suggested that he had told them that he was sorry for what he had done. The submission made on his behalf to the primary judge as recorded in his Honour’s reasons was that he “deeply regretted that [he] was in the position of having been found by the Court to have breached its orders”. In other words, he was sorry he had been caught out or, as the primary judge put it, he regretted he had been found in contempt. So far as I can tell there was no evidence before the primary judge to indicate that he had any insight into, let alone compunction for, what he had done.

84    What is more, I have no confidence that the appellant would not use the opportunity of his release from gaol to continue his vendetta against the respondents, first, because of the absence of evidence of remorse; secondly, because of failure of the appellant to give sworn evidence in support of his application; and thirdly, because of the evidence adduced by the respondents in opposition to it.

85    The respondents adduced evidence that, on or after 12 January 2017, while he was on bail awaiting sentence, the appellant re-tweeted a tweet from Charif Kazal from 12 January 2017 which contained a link to an article on the Kazal website relating to Mr David. The primary judge found the appellant guilty of charge 5 for including links in tweets which directed readers to the Kazal website. This tweet appears to fit into the same category. It was not disclosed in the sentencing hearing. Mr Ryan SC, who appeared with Mr Bolster for the appellant, told the Court that he was instructed that it was removed on or about the date of sentence but there was no evidence to this effect or at whose instigation it took place.

86    The respondents also adduced evidence showing that on 11 January 2017, some 13 tweets posted in September 2016 containing statements similar to those the subject of the primary judge’s orders remained on the appellant’s Twitter feed. These tweets were dated 6, 7, 8, 12, 14, 15, 17, 20, 25, 26, 27, 28, 29, 30 September, and each attached a pdf of an email sent from the appellant to Ms McClymont the same day, with a reference in the subject line to the particular day of the appellant’s campaign to stop stories being written about the Kazal family. These tweets or posts were not the subject of the charges before the primary judge, though some of them contain references to the Kazal website. The 6 September 2016 tweet, for example, attached an email to Ms McClymont, which did, and which also referred to Mr David as a “Corporate Thief” who stole millions from the Kazals, including “the $170 million … business”, and as “the scum of society”. The concluding paragraph began with the warning: “My family will not stop until we get justice…”.

87    I have considered whether a conditional release would be suitable but have decided otherwise. In his affidavit, Mr Bishop submitted that the appellant is not a flight risk, pointing out that he complied with the bail conditions imposed by the primary judge between conviction and sentence, including by surrendering his passport. He asserted that the appellant is in a position to provide both security and a surety should the Court be minded to impose conditions. But he offered no foundation for the assertion and neither he nor counsel identified the amount or source of the security or a suitable person who was willing to act as surety, let alone proffer evidence from such a person.

88    Mr Ryan submitted that any concerns about the prospects of the appellant reoffending could be alleviated by the imposition of a condition that he close his Twitter account and not open another until further order. Having regard to the evidence before the primary judge and the additional evidence in the present case, I am not satisfied that this would be sufficient.

Costs

89    The respondents asked for an order that the appellant pay their costs forthwith and on an indemnity basis. They ultimately resiled from the request that the costs be payable forthwith but submitted that an order for indemnity costs should be made “given that an indemnity costs order is the usual order in a successful contempt”.

90    The award of costs in this as in any other matter is in the discretion of the Court. An order that costs be paid on an indemnity basis is exceptional. Nevertheless, an order for indemnity costs is certainly not uncommon in contempt cases and it has been described in some cases as usual: see Connect TV Pty Ltd v All Rounder Investments Pty Ltd (No 4) [2013] FCA 393 at [43] (Tracey J), Infa-Secure Pty Ltd v Crocker (No 2) [2016] FCA 202; (2016) 338 ALR 586 at [44] (Reeves J). Certainly, in Victoria and in Queensland it seems to be the “common or usual practice”: Deputy Commissioner of Taxation v Gashi (No 3) [2011] VSC 448 at [20] (Dixon J) and Infa-Secure (above). In National Australia Bank Ltd v Juric (No 2) [2001] VSC 398 at [70] Gillard J explained:

[I]t has been recognised for many, many years in contempt cases, that a litigant who must come to court in order to enforce an order which has been breached by contempt, or to have a person dealt with for contempt, should not be out of pocket.

91    On the other hand, in Construction, Forestry, Mining and Energy Union v BHP Steel (AIS) Pty Ltd [2003] FCAFC 13; 196 ALR 350, at [6] Moore J observed:

There has been limited judicial consideration of what principles (if any) govern the ordering of indemnity costs in contempt cases. It is at least clear, following McIntyre v Perkes (1988) 15 NSWLR 417 (see Samuels JA at 424–8 and Rodgers AJA at 434–6) (which involved a comprehensive review of the authorities including some suggesting the existence of a rule), that there is no general principle or rule of law in contempt cases that a successful applicant or successful prosecutor is routinely awarded costs on an indemnity basis: see also to the same effect in this court, Adlam v Noack [1999] FCA 1606; BC9907694 per Mansfield J at [29], LED Builders Pty Ltd v Eagle Homes Pty Ltd [1999] FCA 1213; BC9905513 per Lindgren J at [64]–[65]. Indeed as is the conventional practice in most cases, costs are routinely awarded in contempt cases on a party and party basis. In McIntyre v Perkes (1988) 15 NSWLR 417 Samuels JA (at 424 and 428) relevantly said:

The respondent, however, submitted that the judge had erred in failing to apply “the normal rule which in cases where an intentional contempt of Court is proved on an application by a private prosecutor is for costs to be ordered on a basis calculated substantially to indemnify the prosecutor”. …

In my opinion this survey, no doubt not exhaustive but reasonably extensive, of the textbooks and cases does not reveal any rule of law or any established practice binding upon the judge in this case and requiring him to make one of the orders for which the respondent contended.

(Emphasis added.)

92    His Honour also pointed to a number of authorities in which costs were awarded on an indemnity basis in lieu of a penalty as a means of punishing the contemnor ([8]–[10]).

93    Whatever the true position might be at a contempt hearing, this proceeding is not an action for contempt; it is an interlocutory proceeding in an appeal. The respondents cited no authority to support the submission that the usual order in such cases is that costs be paid on an indemnity basis. In Construction, Forestry, Mining and Energy Union v Grocon Constructors (Victoria) Pty Ltd [2014] VSCA 298 Ashley, Redlich, and Weinberg JJA held, on the assumption that indemnity costs are usually awarded in contempt proceedings for breach of court orders, that it does not automatically follow that costs will be awarded on an indemnity basis at the appellate level. In that case the court declined to award indemnity costs, noting that the appeal was conducted “in a perfectly proper manner, raised at least one point of real difficulty, and that it could not be said that the sole ground upon which leave to appeal was granted was unarguable”.

94    This is not an appeal, but it is an application heard in the Court’s appellate jurisdiction. I do not consider that the appellant’s stay application was unarguable and it was certainly conducted in “a perfectly proper manner”. While in one sense it might be said that the respondents appeared to enforce the Court’s orders, I am not minded to make the order sought.

95    The appellant should pay the respondents’ costs, but on the ordinary basis.

Associate:

Dated:    10 March 2017