FEDERAL COURT OF AUSTRALIA
Vaysman v Deckers Outdoor Corporation Inc. [2011] FCAFC 17
IN THE FEDERAL COURT OF AUSTRALIA | |
| Appellant | |
AND: | DECKERS OUTDOOR CORPORATION INC. Respondent |
DATE OF ORDER: | |
WHERE MADE: |
THE COURT ORDERS THAT:
2. The orders in the paragraphs numbered 3, 4 and 5 of the order made on 15 September 2010 in proceeding number VID 1022 of 2007 be set aside.
3. There be substituted for those orders, an order that the appellant pay a fine in the sum of $50,000.
4. The sentence of imprisonment served by the appellant between 15 September 2010 and 5 November 2010 be taken to have been served in lieu of the payment of the fine referred to in paragraph 3 of this order.
5. There be no order as to the costs of the appeal.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.
VICTORIA DISTRICT REGISTRY | |
GENERAL DIVISION | VID 858 of 2010 |
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA |
BETWEEN: | JOSEF VAYSMAN Appellant
|
AND: | DECKERS OUTDOOR CORPORATION INC. Respondent
|
JUDGES: | GRAY, BESANKO AND BROMBERG JJ |
DATE: | 16 FEBRUARY 2011 |
PLACE: | MELBOURNE |
REASONS FOR JUDGMENT
GRAY J:
The nature and history of the proceeding
1 This is an appeal against sentences of imprisonment, imposed by a single judge of the Court, in respect of 10 charges of contempt of court, on each of which the learned primary judge had found the appellant guilty. His Honour’s reasons for judgment on the sentences are published as Deckers Outdoor Corporation Inc. v Farley (No 9) [2010] FCA 1007. The appellant sought to rely on an amended notice of appeal. The grounds relied on were: error in applying the principle of parity of sentencing with other like offenders; failure to take into account properly the age and ill health of the appellant; failure properly to take into account the appellant’s past good character; double punishment; misconstruction of a statement made by the appellant to the Court through his counsel; and manifest excess of the sentences on individual charges, the total effective sentence and the term of imprisonment the appellant was actually required to serve before the balance was suspended.
2 For at least four decades, footwear with the uppers made of sheepskin, with the wool on the inside, have been manufactured and sold widely in Australia. Such footwear has been known as Ug boots, Ugg boots, or Ugh boots. By reason of long usage, these variants of the name for such footwear have become terms that are generic of that footwear in Australia. See, for instance, the Australian Pocket Oxford Dictionary (2nd ed, Oxford University Press, Melbourne, 1984), which defines “ug boot” as “fleecy lined knee-length boot with untanned upper.” The definition is said to have been derived from an “Eskimo” term, given as ugurulik. In more recent years, the respondent to this appeal, an American corporation, has attempted to secure a worldwide monopoly on the terms Ug boots, Ugg boots and Ugh boots, along with other variations. It has managed to obtain registered trademarks of those terms in a number of countries. Despite the generic nature of the terms in Australia, the respondent has been successful in obtaining court orders of a discretionary nature that assist it in attempting to monopolise those terms. The contempt of court charges of which the appellant was found guilty, and for which he was sentenced to be imprisoned, are the result of contraventions of, and failures to comply with, such orders and other related orders. Many members of the public might wonder why Australian public money should be spent on the imprisonment of someone in aid of such an unmeritorious campaign. Although the benefit of orders imprisoning the appellant is substantially a private benefit to the respondent in its campaign for a monopoly, there is a public interest in ensuring that the orders of a court are obeyed. The principal question in the present appeal is whether the sentences imposed reflect the gravity of the appellant’s defiance of the orders concerned.
3 Because the appellant’s solicitor miscalculated the period within which an appeal might be brought from the sentencing judgment, fixed by O 52 r 15(1)(a)(i) of the Federal Court Rules, that solicitor attempted to file a notice of appeal one day late. It was therefore necessary for the appellant to file an application for leave to appeal out of time, pursuant to O 52 r 15(2) of the Federal Court Rules. Such an application was filed on 8 October 2010, along with a notice of motion seeking orders that the application be heard at the same time as the appeal and that the application be expedited. On 14 October 2010, Kenny J made orders to the effect of the notice of motion. When the application for leave to appeal came on for hearing on 5 November 2010, counsel for the respondent indicated that the respondent did not oppose the grant of leave. The Full Court granted leave and proceeded to hear the appeal.
4 At the conclusion of the hearing of the appeal on that day, by majority, the Full Court ordered that the appellant be released from custody forthwith. The Full Court reserved its judgment.
The statements of charges
5 There are two statements of charges relevant to this appeal. The first is an amended statement of charge, filed on 14 March 2008. It is 31 pages long. It relates to orders made and undertakings given in two proceedings, numbered V 1114 of 2003 (“the 2003 proceeding”) and VID 1022 of 2007 (“the 2007 proceeding”) respectively, which were consolidated by order made on 4 December 2007. The 2003 proceeding involved four respondents, two being corporations and two being natural persons (the appellant’s son Vladimir Vaysman and daughter Victoria Vaysman). The 2007 proceeding had 22 respondents, including the appellant, listed in a schedule of parties additional to the 31 pages of the amended statement of charge. The document itself contains a variety of charges against a number of respondents. The passages relevant to the appellant are as follows.
6 Paragraph 29 alleges that, on 27 November 2007, in the 2007 proceeding, the Court made an order that three respondents, including the appellant and each of them:
be restrained, whether by themselves, their directors, officers, partners, employees, agents, spouses, family members or others acting on their behalf or on their instructions or with their encouragement or in any other way from, until trial or further order:
(a) importing, exporting, manufacturing, promoting, advertising, distributing, offering for sale, selling or exhibiting in public the Enjoined Products;
(b) disposing or dealing with the Enjoined Products;
(c) authorising, procuring or inducing any person to do any act which would be an infringement of the injunction referred to in paragraph (a) above;
(d) representing that the Enjoined Products are imported, exported, manufactured, advertised, promoted, offered for sale and/or sold with the sponsorship or approval of the Applicant;
(e) representing that the Enjoined Products are the Ugg Products (as defined in paragraph 7 of the Statement of Claim);
(f) representing the Enjoined Products emanate from the same trade source as the Ugg Products;
(g) representing that the Enjoined Products are made by the Applicant;
(h) representing that the businesses of the Respondents are licensed, authorised, sponsored, approved or endorsed by the Applicant;
(i) representing that the Enjoined Products are worth AUD$50; and/or
(j) representing that the Enjoined Products are “gifts” and/or “of no commercial value” if exported.
(the November 2007 Order).
In order to understand the terms of this order, it would clearly be necessary to go to other documents. It can be assumed that (as is the case with an earlier undertaking by other parties quoted in para 28.1 of the amended statement of charge) there is a definition somewhere of “Enjoined Products”. It would also be necessary to go to the relevant paragraph of the statement of claim in the 2007 proceeding to find out what is meant by “the Ugg Products”. These definitions are not set out in relation to the orders quoted in the amended statement of charge.
7 Paragraph 30 of the amended statement of charge deals with service of the order on various parties, including the appellant. It is alleged that service on the appellant was effected on 30 November 2007 by a process server at 1 Roper Street, Moorabbin.
8 The following allegations are made in the statement of charge against the appellant:
35. From 27 November 2007 to the present:
(a) the Sixth Respondent (Josef Vaysman) has been the sole director and shareholder of the Eighth Respondent (Millhouse Pty Ltd);
(b) by reason of the matters in (a), the Sixth Respondent (Josef Vaysman) has been in effective or absolute control of the conduct of the Eighth Respondent (Millhouse Pty Ltd).
36. In breach of the November 2007 Order, on 7 and 8 December 2007, the Sixth and/or Eighth Respondents (Josef Vaysman and/or Millhouse Pty Ltd) deliberately and voluntarily distributed, disposed and dealt with the Enjoined Products and/or procured or induced a person to offer to sell and sell the Enjoined Products by on 7 December 2007 supplying such Enjoined Products in boxes bearing the name “Millhouse” to a person outside the Roper Street Factory which were then offered for sale and sold by that person on 8 December 2007 at stall number C44 of the Queen Victoria Market, Melbourne, Victoria.
PARTICULARS
The Applicant refers to paragraphs 11 and 12 inclusive of the affidavit of Anthony Watson sworn 11 December 2007 (the 11 December 2007 Watson Affidavit) and will call direct evidence to that effect from Leah Farley and Dianne Sommer.
37. Further, in breach of the November 2007 Order, from 27 November 2007 to 12 December 2007 the Sixth Respondent (Josef Vaysman) deliberately and voluntarily manufactured the Enjoined Products at the Roper Street Factory.
PARTICULARS
The Applicant refers to paragraphs 4 to 14 inclusive of the 14 [sic] December 2007 Watson Affidavit.
9 Further allegations against the appellant appeared in the amended statement of charge in the following paragraphs:
49. On 26 November 2007, Justice Tracey made orders (the 26 November 2007 Orders). Paragraph 6 of the 26 November 2007 Orders required:
49.1 Subject to paragraph 7 of the 26 November 2007 Orders, within 10 working days after being served with this order, the Second, Third, Sixth, Seventh, Eighth, Eleventh, Twelfth, Thirteenth and Fourteenth Respondents must swear and serve on the Applicant an affidavit setting out the to the best of his, her or its ability of all his, her or its assets world wide, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of his, her or its interest in the assets.
50. A sealed copy of the 26 November 2007 Orders were duly served on the Second, Third, Sixth, Seventh, Eighth, Eleventh, Twelfth, Thirteenth and Fourteenth Respondents.
PARTICULARS
...
The Sixth, Seventh and Eighth Respondents were served with the 26 November 2007 Orders under facsimile by way of service dated 26 November 2007 addressed to their solicitors, Goldsmiths, and sent to 03 9329 1543.
The Eleventh and Thirteenth Respondents were served with the 26 November 2007 Orders under cover letter dated 22 November 2007 sent by courier to the Office of Green & Sternfeld Pty Ltd, 201 Balaclava Road, Caulfield North, Victoria.
...
52. In breach of the 26 November 2007 Orders, the Sixth Respondent (Josef Vaysman) did not comply with paragraph 6 of the 26 November 2007 Orders. The Sixth Respondent (Josef Vaysman) did not object to compliance on the grounds that this information would tend to incriminate him or make him liable to a civil penalty.
PARTICULARS
The Applicant refers to paragraph 5 of the Affidavit of Anthony Brooke Watson sworn 6 February 2008.
The Sixth Respondent (Josef Vaysman) has since filed and served an affidavit on 27 February 2008 in compliance with the 26 November 2007 Orders.
...
54. From # [sic] to the present:
(a) the Sixth Respondent (Josef Vaysman) has been the sole director and shareholder of the Eighth Respondent (Millhouse Pty Ltd);
(b) by reason of the matters in (a), the Sixth Respondent (Josef Vaysman) has been in effective or absolute control of the conduct of the Eighth Respondent and the person who should have caused the Eighth Respondent to comply with the 26 November 2007 Orders.
55. In breach of the 26 November 2007 Orders, the Sixth Respondent (Josef Vaysman) has not caused the Eighth Respondent (Millhouse Pty Ltd) to comply with paragraph 6 of the 26 November 2007 Orders. The Sixth Respondent (Josef Vaysman) did not object to compliance on the grounds that this information would tend to incriminate him or make him liable to a civil penalty.
PARTICULARS
The Applicant refers to paragraph 5 of the Affidavit of Anthony Brooke Watson sworn 6 February 2008.
56. From 26 September 2006 to the present:
(a) the Sixth Respondent (Josef Vaysman) has been the sole director and shareholder of the Eleventh (HGU Pty Ltd) [sic];
(b) by reason of the matters in (a), the Sixth Respondent (Josef Vaysman) has been in effective or absolute control of the conduct of the Eleventh (HGU Pty Ltd) [sic] and the person who should have caused the Fourth [sic] Respondent to comply with the 26 November 2007 Orders.
57. In breach of the 26 November 2007 Orders, the Sixth Respondent (Josef Vaysman) has not caused the Eleventh (HGU Pty Ltd) [sic] to comply with paragraph 6 of the 26 November 2007 Orders. The Sixth Respondent (Josef Vaysman) did not object to compliance on the grounds that this information would tend to incriminate him or make him liable to a civil penalty.
PARTICULARS
The Applicant refers to paragraph 5 of the Affidavit of Anthony Brooke Watson sworn 6 February 2008.
...
60. From 26 September 2006 to the present:
(a) the Sixth Respondent (Josef Vaysman) has been the sole director and shareholder of the Thirteenth (Taskinc Pty Ltd) [sic];
(b) by reason of the matters in (a), the Sixth Respondent (Josef Vaysman) has been in effective or absolute control of the conduct of the Thirteenth (Taskinc Pty Ltd) [sic] and the person who should have caused the Thirteenth Respondent to comply with the 26 November 2007 Orders.
61. In breach of the 26 November 2007 Orders, the Sixth Respondent (Josef Vaysman) has not caused the Thirteenth Respondent (Taskinc Pty Ltd) to comply with paragraph 6 of the 26 November 2007 Orders. The Sixth Respondent (Josef Vaysman) did not object to compliance on the grounds that this information would tend to incriminate him or make him liable to a civil penalty.
PARTICULARS
The Applicant refers to paragraph 5 of the Affidavit of Anthony Brooke Watson sworn 6 February 2008.
...
64. On 14 December 2007, Justice Tracey made orders in this proceeding (the 14 December 2007 Orders). Paragraph 10 of the 14 December 2007 Orders required:
64.1 Subject to paragraph 11 of the 14 December 2007 Orders, within 10 working days after being served with this order, the Seventeenth Respondent (Vernon Co Pty Ltd) and the Eighteenth Respondent (Rastov Pty Ltd) must swear and serve on the Applicant an affidavit setting out the to the best of its ability of all its assets world wide, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of its interest in the assets.
65. A sealed copy of the 14 December 2007 Orders were duly served on the Seventeenth and Eighteenth Respondents.
PARTICULARS
The Seventeenth Respondent was served with the 14 December 2007 Orders under cover letter dated 17 December 2007 sent by courier to 11 Ellington Street, Caulfield South, Victoria.
The Eighteenth Respondent was served with the 14 December 2007 Orders under cover letter dated 17 December 2007 sent by courier to Unit 1, 544 New Street, Brighton, Victoria.
66. From 8 December 2006 to the present:
(a) the Sixth Respondent (Josef Vaysman) has been the sole director and shareholder of the Seventeenth Respondent (Vernon Co Pty Ltd);
(b) by reason of the matters in (a), the Sixth Respondent (Josef Vaysman) has been in effective or absolute control of the conduct of the Seventeenth Respondent (Vernon Co Pty Ltd) and the person who should have caused the Seventeenth Respondent to comply with the 14 December 2007 Orders.
67. In breach of the 14 December 2007 Orders, the Sixth Respondent (Josef Vaysman) has not caused the Seventeenth Respondent (Vernon Co Pty Ltd) to comply with paragraph 10 of the 14 December 2007 Orders. The Sixth Respondent (Josef Vaysman) did not object to compliance on the grounds that this information would tend to incriminate him or make him liable to a civil penalty.
PARTICULARS
The Applicant refers to paragraph 7 of the Affidavit of Anthony Brooke Watson sworn 6 February 2008.
10 The charges contained in this amended statement of charge, upon which the appellant was sentenced, were identified for the purposes of the proceeding by reference to their paragraph numbers in the amended statement of charge. They were identified as charges numbers 36, 37, 52, 55, 57, 61 and 67.
11 By a further statement of charge, dated 10 March 2009 and filed on 11 March 2009, further allegations were made against the appellant. In para 1, the passage from the order of 27 November 2007, quoted in [6] above, was repeated. In this document, para 2 contained the definition of the term “Enjoined Products” from that order, in the following terms:
sheepskin footwear or any other products which feature or which have printed or embossed on them or on any hang tags, care tags, sewn in labels or any printed products:
(i) the name “Ugg”;
(ii) the name “Ugg Australia”;
(iii) the Ugg Logo (as defined in paragraph 7(c) of the Statement of Claim filed in this proceeding);
(iv) the Sun Device (as defined in paragraph 10(a) of the Statement of Claim filed in this proceeding)
(v) the Trade Marks (as defined in paragraph 9 of the Statement of Claim filed in this proceeding); and/or
(vi) the Copyright Works (as defined in paragraph 10 of the Statement of Claim filed in this proceeding)
This definition also requires the reader to look at various paragraphs of the statement of claim, in order to understand the order.
12 Paragraph 3 of the statement of charge repeats the allegation of service of the order on the appellant on 30 November 2007 at 1 Roper Street, Moorabbin. The paragraphs of this statement of charge relevant to the appeal are as follows:
4. In breach of the November 2007 order, between March 2008 and 23 January 2009, the Sixth Respondent (Josef Vaysman) deliberately and voluntarily manufactured the Enjoined Products at Suite 11, 34 Christensen Street, Moorabbin in the State of Victoria (the Christensen Street Factory).
PARTICULARS
The Applicant refers to:
A. paragraphs 6 to 18 of the affidavit of Anthony Watson dated 20 January 2009 (the 20 January 2009 Watson Affidavit);
B. paragraphs 2 to 17 of the affidavit of Anthony Watson dated 4 February 2009 (the 4 February 2009 Watson Affidavit); and
C. the first Affidavit of Anthony Watson dated 6 March 2009 (ie the affidavit which is 76 paragraphs in length) (the First 6 March 2009 Watson Affidavit).
5. Further, in breach of the November 2007 Order, between March 2008 and 23 January 2009, the Sixth Respondent (Josef Vaysman) deliberately and voluntarily distributed, disposed of, dealt in, sold and/or exported the Enjoined Products from the Christensen Street Factory.
PARTICULARS
The Applicant repeats the particulars under paragraph 4 above.
...
10. Further, on 21 January 2009, Justice Tracey made the following ex parte order in this proceeding (the 21 January 2009 Order):
“The Sixth and Twenty Third Respondents until further order be restrained whether by themselves, their directors, employees, agents, spouses, family members or others acting on their behalf or on their instructions or with their encouragement or in any other way from approaching within 100 metres of Suite 11, 34 Christensin [sic] Street, Moorabbin in the State of Victoria.”
PARTICULARS
The Applicant refers to paragraph 30 of the Search Order made by Justice Tracey on 21 January 2009.
11. The 21 January 2009 Order was served personally on the Sixth Respondent (Josef Vaysman) on 23 January 2009, and was also orally translated to him in his native language, Russian.
PARTICULARS
The Applicant refers to:
A. paragraphs 11 to 31 of the independent solicitor report of Marie Wong dated 5 February 2009 (Court Exhibit 68);
B. paragraph 4 of the affidavit of Anthony Watson dated 4 February 2009; and
C. the transcript of the hearing conducted by Justice Tracey by telephone to the premises at suite [sic] 11, 34 Christensen Street, Moorabbin on 23 January 2009 especially pages 3 to 6.
Breaches of the November 2007 Order by the Sixth Respondent (Josef Vaysman)
12. In breach of the 21 January 2009 Order, on 5 March 2009 the Sixth Respondent (Josef Vaysman) deliberately and voluntarily approached within 100 metres, and indeed entered, the premises at Suite 11, 34 Christensen Street, Moorabbin in the State of Victoria.
PARTICULARS
The Applicant refers to the second Affidavit of Anthony Watson dated 6 March 2009 (is the affidavit which is 4 pages and 9 paragraphs in length) (the Second 6 March 2009 Watson Affidavit), and relies upon the oral evidence of Vicki Evans of her observations of Josef Vaysman at Suite 111 [sic], 34 Christensen Street, Moorabbin on 5 March 2009.
13 Again, the charges have been identified by reference to their paragraph numbers in this statement of charge, as charges numbers 4, 5 and 12.
14 It should be noted that the statements of charge do not allege against the appellant contumacy. An allegation of contumacy, if made and proved, would have rendered the appellant liable to be sentenced for what has been regarded traditionally as criminal contempt of court. Nor do the statements of charge allege against the appellant that he acted wilfully. In charges 36, 37, 4, 5 and 12, the formulation “deliberately and voluntarily” has been chosen. Charge 52 alleges only a failure to comply, with no allegation of any element of intent. Similarly, charges 55, 57, 61 and 67 allege failure to cause each of the corporations concerned to take some action, again without any allegation of intent.
The orders the subject of the appeal
15 On 15 September 2010, the primary judge made orders against the appellant in the following terms:
1. It be declared that the Sixth Respondent is guilty of contempt by reason of the matters set out in Charges 36, 37, 52, 55, 57, 61 and 67 of the Amended Statement of Charge dated 14 March 2008.
2. It be declared that the Sixth Respondent is guilty of contempt by reason of the matters set out in Charges 4, 5 and 12 of the Statement of Charge dated 10 March 2009.
3. The Sixth Respondent be imprisoned for the following periods:
(a) In respect of Charge 36 – two months’ imprisonment.
(b) In respect of Charge 37 – nine months’ imprisonment.
(c) In respect of Charge 52 – one month’s imprisonment.
(d) In respect of Charge 55 – one month’s imprisonment.
(e) In respect of Charge 57 – one month’s imprisonment.
(f) In respect of Charge 61 – one month’s imprisonment.
(g) In respect of Charge 67 – one month’s imprisonment.
(h) In respect of Charge 4 – 18 months’ imprisonment.
(i) In respect of Charge 5 – six months’ imprisonment.
(j) In respect of Charge 12 – three months’ imprisonment.
each sentence to be served concurrently with each other sentence.
4. The Sixth Respondent be imprisoned for a period of 18 months with:
(a) The first six months being served in any event; and
(b) The balance of the sentence being suspended from execution on condition that the Sixth Respondent refrains from contravening any of the orders made herein and binding on him on 27 November 2007 and 21 January 2009 for a period of two years from the date on which the suspension takes effect.
5. A warrant issue for the committal of the Sixth Respondent to prison for a period of six months.
6. The Sixth Respondent pay the Applicant’s costs of the Applicant’s notices of motion dated 11 January 2008 and 10 March 2009 on a solicitor-client basis.
16 The appellant appeals only in respect of the orders numbered 3, 4 and 5. This means that, despite the fact that the declarations in paras 1 and 2 of the order are in an inappropriate form, they will stand. It also means that the order for costs in para 6 will stand.
The findings in relation to the charges
17 In order to judge the appropriateness of the sentences, it is necessary to examine the findings of the primary judge in relation to the various contempts and the circumstances in which they were committed. In relation to charges 36, 37, 52, 55, 57, 61 and 67, those findings are in the reasons for judgment published as Deckers Outdoor Corporation Pty Ltd v Farley (No 6) [2010] FCA 391.
18 Charge 36 is dealt with at [105]-[106]. At [105], his Honour said that the applicant relied on the evidence summarised at [63]-[65]. Those paragraphs appear to contain a summary of part of the evidence relating to two occasions on which search orders were executed at a factory in Roper Street, Brunswick (“the Roper Street factory”). The first of these occasions was 13 November 2007 and the second 12 December 2007. The appellant was present on both occasions. The evidence summarised deals with what was found on the premises on the two occasions. On 12 December 2007, there was present a quantity of products infringing the injunctions that had been granted, as well as machinery and materials appropriate for the manufacture of sheepskin footwear. On the face of it, this evidence appears to have nothing to do with the charge that, on 7 and 8 December 2007, the appellant and Millhouse Pty Ltd deliberately and voluntarily distributed, disposed and dealt with Enjoined Products and/or procured or induced a person to offer to sell and sell Enjoined Products, by supplying those products in boxes bearing the name “Millhouse” to a person outside the Roper Street factory, which were then offered by sale and sold by that person on the following day at stall number C44 at the Queen Victoria Market.
19 After the reference to [63]-[65], the primary judge referred to evidence of a Ms Sommer and a Ms Farley that a man they observed at stall C44 was selling many pairs of boots branded with the respondent’s trademarks. His Honour referred to photographic evidence showing those marks on the footwear. At [106], his Honour said:
Josef Vaysman denied Charge 36. He admitted that the photographs taken by Ms Sommer and Ms Farley were of his stall at the Victoria Market and that he had made the products shown in the photograph. He admitted that he had personally glued a sole with Ugg branding onto a boot. He maintained, however, that none of the items of sheepskin footwear in the photographs were Enjoined Products (as defined in the 27 November 2007 orders). I do not accept his evidence. His admission that he had glued “a sole with Ugg branding onto a boot” is, literally, true. However it represents a gross understatement. The undisputed evidence of many witnesses was that he was involved in the manufacture of a very large number of counterfeit boots. The photographs clearly show sheepskin footwear bearing the “Ugg Australia” logo.
20 The evidence to which his Honour referred appears to be that summarised at [83]. Apparently, Ms Farley and Ms Sommer attended the Queen Victoria Market on 8 December 2007. At stall number C44, they observed a man selling footwear, the same man they had seen at the Roper Street factory the previous evening. They saw the same bags that he had carried out of the Roper Street factory. They saw a box labelled “Joseph/Australia”. They purchased some footwear with one of the respondent’s marks moulded into the sole and took photographs depicting boots with such a mark on a label sewn onto them.
21 At [81], there is a summary of the evidence of Ms Sommer and Ms Farley of what occurred on 7 December 2007 at the Roper Street factory. They saw the man whom they saw on the following day at the Queen Victoria Market enter the factory. Subsequently, he left with the appellant, who was carrying two large boxes of sheepskin footwear with the name “Millhouse” on their sides. The tops of the boxes were open and sheepskin footwear was visible inside them in photographs taken by Ms Farley and Ms Sommer.
22 Despite charge 36 having in its terms specific reference to the appellant supplying infringing products in boxes bearing the name “Millhouse” to a person outside the Roper Street factory, which products were then offered for sale at stall number C44, his Honour did not refer to the evidence summarised in [81] in dealing with this charge. Nevertheless, at [174], his Honour expressed the finding that the respondent had proved beyond reasonable doubt that the appellant deliberately engaged in the conduct alleged in (among other charges) charge number 36.
23 At [107]-[111], the primary judge dealt with charge 37. This charge alleged that the appellant deliberately and voluntarily manufactured Enjoined Products at the Roper Street factory from 27 November 2007 to 12 December 2007.
24 At [107], his Honour referred to evidence of the search of the Roper Street factory on 12 December 2007. He said that he had dealt with the evidence at [81]-[82]. In fact, that evidence is found at [64]-[65]. I have referred to it in [18] above. His Honour also referred to the observations of Ms Sommer and Ms Farley on 7 and 8 December 2007, which he said was at [94]-[96]. In fact, that evidence is found at [81]-[83] (see [20]-[21] above). At [109]-[111], his Honour said:
[109] In addition to the evidence which is summarised above at [81]-[82] [sic] Mr Watson said that, when he attended the Roper Street Factory on 12 December 2007 (to execute a search warrant issued by the Court), Josef was present. Until Vladimir arrived, no person other than Josef and Polina Vaysman was apparently in control of the factory. During the 12 December 2007 search Josef paced around the factory and moved items on the workbenches. He was told by Mr Wilson that he could call a solicitor about the search order and that he could isolate any privileged documents but that he may not conceal anything. Josef said words to the effect that he did not understand English. Mr Wilson observed Josef attempt to hide documents. Mr Wilson again told Josef that he may not hide anything. Josef told Mr Wilson that he did not understand. Josef also said to Mr Wilson words to the effect that selling Ugg boots was his job for many years.
[110] Josef admitted that, when his son, Vladimir, was not present at the Roper Street Factory, he carried out the supervision of the factory necessary for the production of the scuffs, slippers, baby bootees, moccasins, short and tall boots. Josef denied that he deliberately and voluntarily manufactured the Enjoined Products at the Roper Street factory from 27 November 2007 to 12 December 2007. He admitted that he manufactured moccasins, sheepskin footwear, slippers and bootees but denied ever manufacturing anything that bore the word Ugg. He denied the accusation that he attempted to hide documents by putting them under a couch during the 12 December 2007 search of the Roper Street Factory. He repeated that he did not read English and would not have known what any of the documents that he was alleged to have put under the couch were. The items he was moving around the Roper Street Factory during the 12 December 2007 search were moccasins, scuffs, slippers and bootees. He maintained that he was not involved in the manufacture and distribution of sheepskin footwear other than moccasins, scuffs, slippers and bootees, which he made for sale at the Victoria Market and other markets.
[111] I do not accept Josef Vaysman’s denial that he manufactured counterfeit products at the Roper Street Factory between 27 November and 12 December 2007. Production of footwear was continuing when Mr Watson returned to the premises on 12 December 2007. Large quantities of Ugg branded products were found which had not been there two weeks earlier. Josef Vaysman was on the premises and apparently in control. He admitted undertaking the manufacture of sheepskin footwear at relevant times. I reject his denial that that footwear (or some of it) had Ugg labels attached to it.
At [174], his Honour found that the respondent had proved beyond reasonable doubt that the appellant deliberately engaged in the conduct alleged in charge 37. It is clear that the evidence on which his Honour relied was entirely circumstantial. Although the charge alleged manufacture during a particular period, there was no evidence at all as to what was manufactured at any particular time, or by whom it was manufactured. The foundation for his Honour’s conclusion at [111] that large quantities of Ugg branded products were found which had not been there two weeks earlier is obscure. I can find no evidence as to what was or was not at the Roper Street factory on 28 November 2007, the day after the orders concerned were made.
25 The primary judge dealt with charge 52 at [112]:
It was common ground that, despite being served with the 26 November 2007 Orders, as at 6 February 2008, Josef Vaysman had not complied with those orders. He said that he was not aware of the 26 November 2007 Orders or that he was required to file an affidavit of his assets until his then solicitor, Mr Goldsmith, informed him of this in mid-February 2008. Josef filed an affidavit in compliance with the 26 November 2007 Orders on 27 February 2008.
26 It is significant that his Honour did not reject the appellant’s evidence that he was not aware of the requirement to file an affidavit of his assets until his solicitor informed him of the requirement in mid-February 2008. It appears that, at worst, the appellant was three weeks late in complying with an order to file an affidavit. The primary judge’s finding that he was satisfied that the respondent had proved this charge beyond reasonable doubt is again found at [174].
27 At [104], the primary judge said that the appellant was the sole director and shareholder of Millhouse Pty Ltd from 27 November 2007 until at least 6 June 2008, HGU Pty Ltd and Taskinc Pty Ltd from 26 September 2006 until at least 6 June 2008, and Vernon Co Pty Ltd from 8 December 2006 until at least 6 June 2008. The primary judge dealt with charges 55, 57, 61 and 67 at [113]-[115]:
[113] It was common ground that, despite his solicitors being served with the 26 November 2007 Orders and the 14 December 2007 Orders, as at 6 June 2008, Josef Vaysman had not caused Millhouse Pty Ltd, HGU Pty Ltd, Taskinc Pty Ltd and Vernon Co Pty Ltd to comply with those orders. Sealed copies of the 14 December 2007 Orders were duly served by courier on Vernon Pty Ltd at 11 Ellington Street, Caulfield South and on Rastov Pty Ltd at Unit 1, No 544 New Street, Brighton.
[114] Josef asserted that, prior to preparing his affidavit on 1 April 2008, he had never heard of the companies Millhouse Pty Ltd, Vernon Co Pty Ltd, HGU Pty Ltd or Taskinc Pty Ltd, he did not know anything about those companies, and he did not know that he was the sole director of those companies. He understood at the date of preparing the affidavit that Millhouse Pty Ltd, Vernon Co Pty Ltd, HGU Pty Ltd and Taskinc Pty Ltd were placed in liquidation on 21 December 2007. Josef said that Vladimir made a stamp version of Josef’s signature and that Josef had authorised Vladimir to use it. Josef had “no idea” when or to what documents Vladimir applied the stamp.
[115] I accept that Josef may have been unaware of the signing of various documents relating to the companies of which he was a director. The day to day conduct of these companies (insofar as they undertook any business activities) would appear to have been in the hands of Vladimir. I do not, however, accept that the first time Josef had heard of these companies was when he was preparing the affidavit which he swore on 1 April 2008. He had solicitors acting for him in the period shortly after the making of the 26 November 2007 and the 14 December 2007 orders. Those orders contained the names of the various companies. Having authorised Vladimir to utilise the stamped version of his signature, he ought reasonably to have caused his solicitors to make enquiries as to the directorships of such companies. In any event, having become aware of the existence of these companies and his directorships of them no later than 1 April 2008, he still failed to comply with the orders.
28 Again, the finding that his Honour was satisfied that the charges have been proved beyond reasonable doubt appears at [174]. His Honour did not engage in any discussion as to whether being the sole director of a corporation ordered to file an affidavit placed the appellant under a duty to the Court to cause each of the corporations to comply with that order, so that the appellant could be found guilty of contempt of court for failing to do so. I infer from the fact that his Honour found these charges proven that none of the corporations had been placed in liquidation in insolvency or by the Court. If the liquidations were of either of those types, s 471A(1) of the Corporations Act 2001 (Cth) would have prohibited the appellant from performing or exercising a function or power as an officer of any of the corporations. His Honour regarded the appellant as under a continuing duty after the liquidations to bring about the result that each of the corporations complied with the Court’s order relating to it. It is clear from [115] that his Honour found the appellant guilty on the basis of omission to do something that his Honour thought the appellant ought reasonably to have done, even after the liquidations. There is no finding that the appellant had access to the books and records of any of the corporations after their liquidation, for the purposes of enabling him to prepare and swear affidavits on behalf of the corporations. Nor is it clear from his Honour’s findings that the appellant was the sole director and shareholder of each of the corporations until “at least 6 June 2008” for how long his Honour would have regarded the duties as enduring.
29 The findings of the primary judge relating to charges 4, 5 and 12 are found in his Honour’s reasons for judgment published as Deckers Outdoor Corporation Inc. v Farley (No 7) [2010] FCA 560. At [14] of those reasons for judgment, his Honour referred to the searches of the Roper Street factory on 13 November and 12 December 2007. His Honour concluded that, after those searches, it would have been evident to the appellant that the respondent was aware that the Roper Street factory was being used to manufacture counterfeit footwear and that any continuation of manufacture there was likely to be detected. At [15]-[16], his Honour said:
[15] Mr Vaysman wished to continue manufacturing footwear. He sought the assistance of his son Vladimir to establish a new factory at 34 Christensen Street Moorabbin. As the sole director and share holder of a company named Sanauria Pty Ltd (“Sanauria’) (the Twenty-Third Respondent in the proceeding) he secured these alternative premises. The lease was entered into by Mr Vaysman, on behalf of Sanauria on 28 February 2008. Machinery used in the making of footwear was installed. Thereafter production of counterfeit footwear was resumed at the new factory. Mr Vaysman admitted that he was personally involved in that manufacturing process. Vladimir Vaysman paid the rent on the premises.
[16] Later in 2008 the Applicant became aware that counterfeit footwear was still being sold and made inquiries. As a result of those inquiries it had reason to believe that the footwear was being manufactured at the Christensen Street premises. A further search order was obtained in relation to those premises. When it was executed on 23 January 2009 Mr Vaysman was present on the premises and more counterfeit footwear was discovered. So too were invoices for the supply of “Ugg” stamping blocks and embossing blocks to Sanauria. Those invoices were dated 18 and 25 November 2008 respectively. The invoice for the embossing blocks had a notation on it which read “PAID 26/11/08”. An “Ugg” stamping block was attached to a “Torelli” machine which was used to stamp the rubber soles of boots and shoes.
30 There is no finding as to the time of installation of machinery, or as to the time of the resumption of manufacture of counterfeit footwear at the Christensen Street factory. How much later in 2008 it was that the respondent became aware that counterfeit footwear was still being made and sold, how long its inquiries took, and how quickly the respondent acted to obtain the search order that was executed on 23 January 2009 are not the subject of specific findings. Given the keenness of the respondent to pursue its interests, it seems unlikely that the awareness came about and the inquiries were instituted early in the period beginning in March 2008. It was not until the latter half of November that stamping blocks and embossing blocks that would have been used in the manufacture of infringing products were purchased by the lessee of that factory.
31 The primary judge’s reasoning in relation to charge 4 is found at [17]-[20]:
[17] Mr Vaysman gave evidence that, as far as he was aware, he was the only person to produce footwear at the Christensen Street factory during the currency of the Sanauria lease. He admitted that some of this footwear included “Ugg” boots. He had made them so that they could be sold and he could make a living. The money was needed for various purposes including payment of the rent on his flat.
[18] Various styles of Ugg footwear were found on the premises on 23 January 2009. Despite his general admission that he was the only person involved in the manufacture of footwear at the Christensen Street factory, Mr Vaysman denied having manufactured some of these boots. He suggested that his son Vladimir may have made some of the boots. I harbour grave reservations about the veracity of Mr Vaysman’s denials that he manufactured some of the footwear which was found at the Christensen Street factory. It is not, however, necessary for me to reach a concluded view in relation to the footwear which Mr Vaysman denied making. This is because he admitted in evidence to having produced up to eight pairs of short black boots per week which had a label on the heel reading “AUS Classic Ugg”. Having made the boots he put the labels on them.
[19] Mr Vaysman was the moving party responsible for the transfer of manufacturing from the Roper Street factory to the Christensen Street factory. He sought and obtained the assistance of his son Vladimir in establishing the new factory. Mr Vaysman, however, disavowed being pressured by Vladimir in relation to the establishment or operation of the production process at the Christensen Street premises. In any event, Vladimir Vaysman left Australia on 28 November 2009 [sic] and had not returned at the time that the search order was executed on 23 January 2009. In the meantime Mr Vaysman continued to work at the factory.
[20] Mr Vaysman’s own evidence satisfies me, beyond reasonable doubt, that he consciously and voluntarily made the “AUS Classic Ugg” boots thereby contravening the orders which I made on 27 November 2007.
The reference to Vladimir Vaysman having left Australia on 28 November 2009, found at [19], appears to be erroneous. Vladimir Vaysman cannot have left Australia on a date later than that by which he had not returned. Counsel for the respondent informed the Court during the hearing of the appeal that the correct date was 28 November 2008.
32 The reasoning on charge 4 makes it clear that the appellant was found guilty on the basis that he produced up to eight pairs of one style of boots per week, which were labelled with one of the respondent’s marks, and that he put the labels on them. There is no finding as to how many weeks were involved. As he said at [18], his Honour found it unnecessary to reach a concluded view about other footwear the appellant denied manufacturing.
33 The reasoning on charge 5 is found at [21]:
Mr Vaysman’s admissions (see above at [17]) that he manufactured counterfeit footwear at the Christensen Street factory and sold that footwear in order to make a living is [sic] sufficient to satisfy me beyond reasonable doubt that he deliberately and voluntarily sold Enjoined Products from that factory.
There is no finding as to the quantity or quantities of infringing products that the appellant sold, so as to be found guilty of contempt of court on charge 5. It is clear from the admissions of the appellant recounted at [17] that he made footwear other than infringing footwear in the Christensen Street factory. He was perfectly entitled to run a factory, and perfectly entitled to manufacture in it whatever he chose. He was entitled to manufacture footwear, including ug boots. He was not entitled to manufacture items that were branded or labelled so as to contravene any of the orders of the Court by which he was bound. Similarly, anything that he manufactured he was entitled to sell, as long as the items sold did not contravene orders of the Court. Findings of contempt of court based on contraventions of those orders must inevitably focus only on items that were manufactured or sold in contravention of those orders.
34 The final charge, charge 12, was based on an order prohibiting the appellant from approaching within 100 metres of the Christensen Street premises. How such a drastic infringement of the appellant’s liberty to lease premises and operate a factory in them, and to do so through a corporation of which he was the sole director, came to be imposed is not the subject of this appeal. Such an order certainly appears to go beyond the enforcement of any rights the respondent may have. The primary judge’s reasoning in relation to charge 12 is found at [30]-[34]:
[30] The evidence relied on by the Applicant to support this charge was very straightforward. It was founded on the observations of an investigator who was present outside the Christensen Street factory between 8:00 and 9:00 pm on 5 March 2009. She observed Mr Vaysman leaving the premises carrying a small box.
[31] Mr Vaysman’s explanation for having done so was given in an affidavit in which he deposed that:
“Both of my visits to the Christensen Street factory (on 5 and 10 March 2009), which I now know were in breach of the Court order, have been prompted by threats from the landlord of those premises that items stored at the factory would be sold by him to recover outstanding rent monies. During both of these visits, I was granted access to the premises by the landlord using a key in his possession. I have breached the Court order in an honest (although mistaken) belief that a visit prompted by the landlord, with the sole purpose of making sure that my possessions were still in order would not amount to a breach of the order.”
Mr Vaysman was able to obtain entry because the landlord’s agent gave him a key after Mr Vaysman had paid to the agent certain monies which were payable to the landlord.
[32] Mr Vaysman was well aware that the Court had ordered that he should not approach within 100 metres of the premises. Despite this he contacted the agent without notice to the Applicant and obtained a key. He appears to have hoped that his entry would not be discovered by the Applicant. Alternative courses of action were available to him but were not availed of. He offered no explanation as to why he had not sought a variation of the Court order or advised the solicitors acting for the Applicant that he wished to enter the premises. Had he been concerned that the landlord might have removed or been about to remove property from the factory that belonged to him or to Sanauria, he could have confirmed the position by discussions with the agent. He did not need to enter the premises on two occasions. Mr Vaysman offered no explanation as to why it was that two visits were required in the space of six days. His visits were not “prompted” by the landlord except, perhaps, in the broadest possible sense. Mr Vaysman’s account is unconvincing. More importantly, it does nothing to support his defence that the Applicant had failed to establish beyond reasonable doubt that he had acted consciously and voluntarily.
[33] Mr Tony Watson, a solicitor acting on behalf of the Applicant, attended the Christensen Street premises on 23 January 2009. On that day he observed that there was a stamping block attached to the Torelli machine. Mr Watson visited the premises again on 6 March 2009. On that visit he observed that the stamping machine was placed on a trolley. It had been turned upside down. An open tool box stood nearby. The stamping block had been removed. This evidence strongly suggests that Mr Vaysman has been less than candid about the purpose of his visit to the premises on 5 March 2009 and about what he did whilst there.
[34] I have no doubt that Mr Vaysman acted consciously and voluntarily in entering the Christensen Street factory on 5 and 10 March 2009.
From what his Honour said at [33], it seems that he was not making a finding that the appellant had removed the stamping block from the Torelli machine on one of his visits. To express doubts about his candour fell short of making a finding that the appellant made use of one of his prohibited visits to remove the block.
The primary judge’s reasoning
35 In Deckers Outdoor Corporation Inc. v Farley (No 8) [2010] FCA 657, the primary judge sentenced several other parties whom he had also found to be in contempt of court in respect of contraventions, or failures to comply with, orders granted for the benefit of the respondent. In that case, at [6]-[8], his Honour set out the principles he regarded as applicable:
[6] The power of the Court to punish for contempts is conferred by s 31 of the Federal Court of Australia Act 1976 (Cth): it has the same powers as are possessed by the High Court. The High Court, in turn, has the same power as was possessed by the Supreme Court of Judicature in England at the time of the enactment of the Judiciary Act 1903 (Cth): see s 24 Judiciary Act. By rule 11.04.1(a) of the High Court Rules 2004 the Court has power to order that a contemnor “pay a fine, be committed to prison, or both pay a fine and be committed to prison.” The Court also has power to order the sequestration of the assets of a contemnor and to suspend on condition any sentence of imprisonment that it might impose in respect of a contempt: see Australian Competition and Consumer Commission v Info4pc.Com Pty Ltd (2002) 121 FCR 24 at 54 (per Nicholson J).
[7] The imposition of a penalty for contempt serves to protect both the interests of the Applicant and the administration of justice. In their joint judgment in Australasian Meat Industry Employees’ Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 107 Gibbs CJ, Mason, Wilson and Deane JJ said that:
“Although the primary purpose in committing a defendant who disobeys an injunction is to enforce the injunction for the benefit of the plaintiff, another purpose is to protect the effective administration of justice by demonstrating that the court’s orders will be enforced. As the authors of Borrie and Lowe’s Law of Contempt (2nd ed. 1983) say, at p 3: “If a court lacked the means to enforce its orders, and its orders could be disobeyed with impunity, not only would individual litigants suffer, the whole administration of justice would be brought into disrepute.””
See also Witham v Holloway (1995) 183 CLR 525 at 533-4; Australian Competition and Consumer Commission v Hughes [2001] FCA 38 at [15].
[8] In Louis Vuitton Malletier SA v Design Elegance Pty Ltd (2006) 149 FCR 494 at 501-2, Merkel J identified the following considerations as being relevant to the determination of an appropriate penalty for contempt of Court:
• The contemnor’s personal circumstances;
• The nature and circumstances of the contempt;
• The effect of the contempt on the administration of justice;
• The contemnor’s culpability;
• The need to deter the contemnor and others from repeating contempt;
• The absence or presence of a prior conviction for contempt;
• The contemnor’s financial means;
• Whether the contemnor has demonstrated genuine contrition and made a full and ample apology;
• Whether the conduct falls within the most serious category of criminal contempt cases such as to warrant the imposition of a term of imprisonment; and
• Whether or not imprisonment is a “last resort” penalty in the circumstances of the case.
See also Info4pc.Com Pty Ltd at 54; Australian Competition and Consumer Commission v World Netsafe Pty Ltd (2003) 133 FCR 279 at 283.
36 His Honour dealt with the appellant on a later date. The reasons for judgment on that occasion are set out in Deckers (No 9). At [4], his Honour said that he had applied the same sentencing principles in dealing with the appellant as he applied to the other parties in Deckers (No 8). At [6]-[7], his Honour summarised the charges of which he had found the appellant guilty. At [8], his Honour referred to an affidavit of the appellant:
Shortly before the originally scheduled penalty hearing Mr Vaysman affirmed an affidavit in which he deposed that he was 74 years old, suffered from significant health and physical problems and spoke little English. He also said that he could not read “any English”. Despite this his affidavit was affirmed without translation. He added that, since he came to Australia, he found it very difficult to assimilate and to learn the language and culture. He said that a custodial sentence would be detrimental to his physical and emotional health. For the first time he expressed himself to be deeply remorseful and regretful for his conduct and apologised “to everyone that I have hurt.” He deposed that he would “never repeat this conduct again.”
At [9]-[18], the primary judge summarised the evidence of Dr Belkin, a general practitioner; Dr O’Brien, who had been consulted by the appellant about problems with his memory; Mr Dingjan, a neuropsychologist; Dr Goloub, a psychologist; and Mr Cummins, a psychologist. The appellant had tendered this evidence. His Honour then proceeded to deal with a number of submissions made on behalf of the appellant. At [19], his Honour said that counsel for the appellant acknowledged that he had committed serious offences which warranted a term of imprisonment being imposed, but contended that a range of mitigating factors warranted any term of imprisonment being wholly and conditionally suspended. The first of the factors with which his Honour dealt was age and ill health. His Honour referred to authorities from the State of Victoria about the relevance of age and ill health to sentencing for criminal offences and referred again to the medical evidence. At [25]-[27], his Honour continued:
[25] It is next to be observed that Mr Vaysman’s medical problems did not prevent him from working between 2007 and 2009. He repeatedly told the court that he was anxious to continue working manufacturing footwear. There is good reason to believe that, had his activities at the Christensen Street factory not been discovered, he would probably still be working on those premises producing footwear.
[26] There can be no doubt that Mr Vaysman is agitated and anxious as a result of being found guilty of a number of charges of contempt of Court. He is naturally apprehensive about the prospect of a term of imprisonment being imposed. There is, however, no evidence that he is seriously ill or any [sic] evidence to support the proposition that ill health will make any period of incarceration imposed on him “particularly onerous.” This is not a case in which Mr Vaysman would be expected to spend most of his remaining years in custody.
[27] On the other hand it is necessary, in sentencing Mr Vaysman, to take into account his age, his infirmity and the language and cultural issues which will be likely to have an adverse impact on him if he is imprisoned. While these considerations do not, in my opinion, justify a wholly suspended sentence, they may warrant a partially suspended sentence.
37 The primary judge then dealt with the submission that the appellant had no prior convictions. At [28], his Honour acknowledged that the appellant’s history as a refugee immigrant, a hard worker and a provider for his family, were matters properly to be taken into account in his favour. At [29], his Honour balanced these matters “against other aspects of [the appellant’s] conduct in the course of the present litigation.” He referred to untruthful evidence of the appellant as to his involvement in the manufacturing business and in relation to his financial circumstances. His Honour concluded “Such conduct clearly undermines his claim to have been of good character.”
38 His Honour then dealt with delay as a mitigating factor at [30]-[32]. He concluded that he placed little weight on the appellant’s complaints relating to delay. His Honour did not accept that the appellant had been deterred from misconduct by reason of the charges being preferred against him. His Honour took into account in the appellant’s favour the absence of any contraventions of the Court’s orders since the laying of the last set of charges.
39 The next factor was the financial effect of the proceedings. At [33], his Honour referred to the fact that the appellant had been declared bankrupt as a result of unpaid judgment debts arising from orders made in the proceeding. He had lost such equity as he had in his family home and the home of his son. At [34]-[36], his Honour referred to some hundreds of thousands of dollars that had passed through accounts over which the appellant had control and to his failure to disclose his personal financial situation and that of companies associated with him. In the absence of such disclosure, his Honour did not think that the appellant was entitled to any allowance for his financial position.
40 His Honour then dealt with a submission relating to parity of sentencing, which relied on a comparison with a sentence given to the appellant’s daughter Victoria Vaysman. At [40], his Honour declined to accept the submission that the appellant’s offending was less serious than that of his daughter. His Honour said:
The most egregious breaches of the Court’s orders which led to the laying of Charges 4, 5 and 12 against Mr Vaysman in 2009, were far more serious than any of the conduct engaged in by Victoria Vaysman. After the manufacturing operations at the Roper Street factory had been discovered at the end of 2007 and the production process was effectively closed down, Mr Vaysman wished to continue manufacturing counterfeit footwear. He sought and obtained the assistance of Vladimir to establish a new factory at Christensen Street Moorabbin. The premises were leased by Sanauria Pty Ltd (“Sanauria’ [sic]), a company of which Mr Vaysman was the sole director. He entered into the lease on behalf of Sanauria on 28 February 2008. Machinery was installed and production of counterfeit footwear soon resumed. Mr Vaysman purchased the machinery for use at Christensen Street. He continued to operate the business at Christensen Street until he was discovered in January 2009. He did so despite having been served with an amended statement of charges in respect of his earlier conduct at Roper Street. The amended charges were laid on 14 March 2008. The gravity of his offending was compounded when, on 5 July 2008, he instructed senior counsel who then appeared on his behalf to advise the Court that he and his wife had “never intended to break the [November 2007] orders and certainly intend to abide by the orders of the Court in the future … They are completely prepared to make further undertakings to abide by Court orders”: see Deckers (No 7) at [11]. Despite these assurances he continued to produce counterfeit products at Christensen Street.
At [41], his Honour referred to further matters distinguishing the appellant’s offending from that of his daughter. It appears that Victoria Vaysman had made full admissions and apologised to those who had suffered because of her misconduct. The appellant had not made full admissions and his apology was a belated one, the sincerity of which his Honour doubted because of exculpatory accounts of his conduct provided to his psychologists.
41 At [42], his Honour said that he was far from satisfied that the appellant acknowledged and accepted that he had contravened orders made by the Court. His Honour referred to exculpatory statements reported by two psychologists and to an admission in an affidavit that the appellant was aware that he was acting in breach of the order when he made one of his visits to the Christensen Street factory the subject of charge 12.
42 At [43]-[45], his Honour said:
[43] Mr Vaysman has, since November 2007, consistently chosen to ignore orders made by the Court. In November and December 2007 he blatantly continued manufacturing counterfeit footwear at the Roper Street factory until his activities were discovered and he was no longer able to work at that factory. He then contrived to resume manufacturing at the Christensen Street premises and was able to do so for a year before he was again discovered producing fake Ugg products. While I accept that Vladimir Vaysman oversaw the operations at Roper Street and Christensen Street and was the main offender, Mr Vaysman played a central role in the illicit business by applying his skills to the manufacture of counterfeit products.
[44] Mr Vaysman’s failures to comply with orders relating to the disclosure of the financial position of himself and companies of which he was a director are of less seriousness but nonetheless reflect his dismissive attitude to compliance with Court orders.
[45] As was the case with Vladimir Vaysman, the need for both personal and general deterrence rank highly as considerations in the sentencing of Mr Vaysman. His conduct warrants nothing less than a sentence of imprisonment. So much has been acknowledged by counsel appearing for him.
At [47], his Honour said that he regarded the most serious offence to be that covered by charge 4. His Honour then proceeded to specify the terms of imprisonment for the respective charges, reflected in his order (see [15] above). At [48], his Honour said that, having regard to the appellant’s age and his indifferent health, his Honour would require that he serve six months’ imprisonment and would suspend from execution the remaining period of the sentence.
Manifest excess
43 The starting point for the process of reasoning in sentencing is the gravity of the offence or offences concerned. In the case of contempt of court involving contravention of, or failure to comply with, court orders, that means assessing the seriousness of the defiance of the Court’s authority. The primary judge essayed this task in Deckers (No 9) at [43]-[44]. In addition, at [40], his Honour described the breaches of the Court’s orders that led to charges 4, 5 and 12 as the “most egregious breaches” of the orders. At [47], his Honour said that he regarded charge 4 as “the most serious offence”.
44 When a comparison is made between the findings that the primary judge made on each of the charges, and his Honour’s description of the gravity of the appellant’s conduct at [43]-[44], there are some disparities. It was not the case that the appellant consistently chose to ignore orders made by the Court from November 2007 until 15 September 2010, when he was sentenced. Charge 36 related to conduct on two days, 7 and 8 December 2007. Charge 37 was confined to the period from 27 November 2007 to 12 December 2007. Charges 4 and 5 concerned a period the starting date of which is indeterminate, but was alleged to be no earlier than March 2008, which ended on 23 January 2009. Charge 12 concerned conduct on two occasions, 5 and 10 March 2009 (although the primary judge referred to only one of these occasions in Deckers No 9 at [7], when summarising his earlier findings of guilt). The omission the subject of charge 52 was remedied on 27 February 2008. The primary judge did not reject the appellant’s evidence that he only became aware of his obligation to file an affidavit of his assets in mid-February 2008. He complied with that obligation within a short time after he became so aware. In relation to the other four charges involving omission, the primary judge accepted that the appellant may have been unaware of the signing of documents relating to the four corporations. His Honour was critical of the appellant for not having made inquiries about the directorships of those corporations. The period during which his Honour apparently thought that those inquiries should have been made began in December 2007 and continued until “at least 6 June 2008”, although it is not clear for how long after the latter date it lasted. These findings do not support the proposition that, from November 2007 until September 2010, the appellant chose consistently to ignore orders made by the Court.
45 At [43] of Deckers (No 9), the primary judge said that the appellant “blatantly continued manufacturing” at the Roper Street factory until his activities were discovered. As I have said, the period concerned was from 27 November until 12 December 2007. By using the word “blatantly”, his Honour cannot have intended to convey that the appellant was acting openly, content to have his activities discovered. The evidence was to the opposite effect. A more appropriate description would have been “deliberately”. In the next sentence, the primary judge said that the appellant “contrived to resume manufacturing” at the Christensen Street factory and “was able to do so for a year before he was again discovered”. Again, his Honour’s findings do not go this far. The appellant was entitled to conduct manufacturing operations in the premises at Christensen Street. He could only be found to be in contempt of court in relation to charge 4 by virtue of having manufactured products that infringed the orders of the Court. He was found guilty of charge 4 on the basis of his own evidence that he had manufactured up to eight pairs a week of a particular type of boot for an unspecified number of weeks. He cannot have begun this activity until some time after the end of February 2008, when machinery was installed at the Christensen Street factory. The statement of charge 4 did not allege that he had begun the relevant manufacture until March 2008. It appears to have been at some time later in 2008 that the respondent became aware that infringing products were being manufactured and sold, put in train its inquiries, and applied for and obtained the search order that was executed on 23 January 2009. These facts suggest that the appellant may have waited some time before resuming manufacture and sale of infringing products. There was no finding that his activities in contravention of the Court’s orders continued after 23 January 2009. While the appellant may have sold more infringing products than he manufactured, there is no specific finding to this effect. There is no finding as to the quantities sold that would enable an assessment to be made of the gravity of the defiance of the Court’s order that resulted in a finding of guilt in relation to charge 5.
46 In the last sentence of [43] of Deckers (No 9), the primary judge said that, although Vladimir Vaysman was the main offender, the appellant “played a central role in the illicit business by applying his skills to the manufacture of counterfeit products.” In relation to manufacturing at Roper Street in the period between 27 November and 12 December 2007, there is no finding as to the extent of the role played by the appellant in manufacturing. The evidence that manufacturing had occurred was circumstantial and there was no attempt to allocate responsibility for actual manufacturing as between the appellant and any other person.
47 At [44] of Deckers (No 9), the primary judge dealt with the appellant’s failures to comply with orders. He described them as reflecting the appellant’s “dismissive attitude to compliance with Court orders.” Again, his Honour’s findings do not support this view. In relation to charge 52, once he became aware of his obligation, the appellant complied with that obligation within a relatively short time. In relation to the other four charges, his Honour accepted that, at least for the period up to 1 April 2008, the appellant did not understand his involvement in the companies. The findings of guilt were made on the basis of a failure to do what the appellant ought reasonably to have done, rather than on the formation of an intention not to comply with the Court’s orders.
48 It is also unclear why the primary judge took the view that the contempts the subject of charges 4 and 5 were “The most egregious” and why charge 4 was “the most serious”. As I have said, the findings of guilt on those charges were based on facts that disclosed minor contraventions of the orders. Charge 4 was sustained by the appellant’s own evidence that he had manufactured up to eight pairs of boots a week for an unspecified number of weeks. There was nothing to suggest that charge 5 involved any more than these boots. Comparisons of seriousness are difficult, however, because of the absence of precise findings as to the appellant’s involvement in manufacturing at Roper Street and as to the quantities he sold so as to be guilty of charge 5.
49 In order to assist the primary judge in the sentencing process, when his Honour was dealing with parties other than the appellant, counsel for the respondent had provided his Honour with a table, containing information about previous cases. The table was designed to contain every case in the history of this Court in which a sentence of imprisonment had been imposed for contempt of court. The table shows 25 cases, including cases involving sentences of imprisonment totally suspended conditionally on compliance with certain orders, and one case in which the sentence of imprisonment was in default of payment of a fine. Overall, the table reflects a consensus that restraint is appropriate in imposing sentences of imprisonment for contempt of court involving contravention of, or failure to comply with, orders of the Court. The authority of a court can be brought into disrepute, rather than enhanced, by too great a tendency to punish severely in cases that do not warrant severity.
50 The longest term of imprisonment imposed prior to the present case was 12 months in Australian Prudential Regulation Authority v Siminton (No 10) [2007] FCA 1814, upheld on appeal in Siminton v Australian Prudential Regulation Authority [2008] FCAFC 90. That case had a considerable public interest element. Mr Siminton had been soliciting deposits from members of the public, and promising to pay interest, without holding a licence under the Banking Act 1959 (Cth). His assets had been frozen by orders of the Court. He was found guilty of eight breaches of those orders, involving the transfer of funds totalling approximately $93,000. To the extent to which he was successful in removing money from his frozen accounts, members of the public who had deposited money with Mr Siminton were less likely to be able to recover the amounts deposited. Mr Siminton’s case was significantly more serious in relation to the conduct of the contemnor, and the impact of that conduct, than anything the appellant did in the present case. A term of 12 months imprisonment was also fixed in Australian Securities and Investments Commission v Reid [2002] FCA 84, in respect of three contraventions of an order that Mr Reid be prohibited from managing a corporation. Again, the case had an element of public protection. The sentence was effectively suspended for two years, on condition of compliance with the orders and the payment of fines. The next highest sentence was nine months, imposed in Australian Securities and Investments Commission v Reid (No 2) [2006] FCA 700 for two breaches of an order prohibiting Mr Reid from managing a corporation. But for Siminton and the two Reid cases, no sentence of imprisonment for longer than six months has ever been imposed by the Court for contempt of court.
51 In any decision relating to sentencing, an important consideration is consistency with the kinds of sentences imposed in comparable cases. Where there have been sufficient examples of sentences for a particular offence, the range will become apparent. The sentencing judge will generally arrive at a sentence within, or close to, that range, depending upon the view taken as to the gravity of the instant offence and the operation of any aggravating or mitigating factors. In the present case, there is nothing to show how the contempt the subject of charge 4 could have been regarded as so serious as to warrant the fixing of a term of imprisonment one and a half times greater than the longest sentence of imprisonment ever imposed by this Court. The orders the appellant contravened and failed to comply with had none of the element of public benefit found in Siminton or of public protection in either of the Reid cases. Even if the appellant’s contempts were conscious and deliberate, they still involved conduct of a far less serious nature than the conduct the subject of a number of the cases referred to in the table. There was nothing to show that the appellant’s conduct on which he was found guilty on charge 37 was of the same level of seriousness as the conduct in Reid. It is clear that the primary judge strayed outside the appropriate range of sentences, having regard to the degree of seriousness of the appellant’s defiance of the orders of the Court.
52 The sentences imposed for the five charges involving the appellant’s failure to comply with orders (as distinct from contravention) demonstrate that the primary judge’s view of the range that was appropriate was astray. The appellant’s conduct the subject of charge 52 was trivial. On the facts as found, the appellant remedied his failure to comply with the order within a relatively short time of being advised of his obligation. Certainly, no term of imprisonment was appropriate for delay in compliance with an order to file an affidavit that was ultimately filed, where that delay arose from a failure to understand the obligation. Similarly, the imposition of a sentence of one month’s imprisonment on each of charges 55, 57, 61 and 67 was unwarranted. The essential nature of the appellant’s conduct was that he failed to take an opportunity or opportunities to seek advice which, if given, might have led him to understand the nature of his obligation.
53 Charges 36 and 5 involved selling of infringing goods already manufactured. The contravention involved in charge 36 was of a minor nature. No findings of fact enabling a determination of the seriousness of the contraventions involved in charge 5 were ever made. The two visits to the Christensen Street factory that formed the subject of charge 12 did not involve a high degree of seriousness, even though deliberate. If the appellant was to be sentenced on the basis that he had used one or other of these visits to remove an item that could have been used in the manufacture of more infringing products, such an aggravating factor would require to have been the subject of a clear finding, rather than an expression of suspicion. The most serious view that could be taken was that his visits provided an opportunity for him to remove the item.
54 In any sentencing process, imprisonment is to be regarded as the penalty of last resort. Any period of deprivation of liberty is a drastic imposition on anyone. The value the law places on liberty is very high. It is incumbent on a sentencing judge to determine first whether any alternative to imprisonment would be appropriate. That step was not taken in the present case. It is true that counsel for the appellant made the concession that the contempts warranted a sentence of imprisonment, albeit a totally suspended one. It is also true that written submissions presented to the primary judge by counsel for the respondent contained reference to authorities in which the appropriateness of imposing fines on someone who is bankrupt, or otherwise without means, was discussed. Neither the concession nor the authorities about bankrupt contemnors absolved the primary judge from a proper consideration of appropriate sentencing measures. The fact that counsel making a plea in mitigation of sentence might concede that imprisonment is appropriate does not absolve the sentencing judge from the obligation to be satisfied that this is the case before such a sentence is imposed. The fact that a person to be sentenced is bankrupt does not prevent the Court from considering the appropriateness of a fine or fines. A bankrupt is not relieved from any obligation to pay a fine. Any such obligation endures during the bankruptcy and after discharge from bankruptcy. It is always possible, and sometimes appropriate, to impose a fine with a term of imprisonment in default of payment of it. See, for instance, Pattison (Trustee), in the matter of Bell (Bankrupt) v Bell [2007] FCA 137. Before settling on imprisonment, the primary judge ought to have directed his attention to whether some other form of punishment was appropriate for some, or all, of the charges.
55 A sentence of imprisonment for a 74 year old man with a previously unblemished record would be a rare thing. A sentence of 18 months’ imprisonment imposed on such a person, coupled with an order requiring him actually to serve six months of that term, could only be the result of contempt of court of an extremely serious kind, having regard to the person’s conduct and to its impact on the public. The appellant’s conduct that led to the findings that he was guilty of contempt on the 10 charges fell far short of such a degree of seriousness. Although characterised as deliberate, the conduct itself was not of sufficient gravity to justify such a sentence. The sentence imposed was outside the appropriate range, having regard to sentences imposed by the Court in other cases. The primary judge’s understanding of where the appropriate range lay was inaccurate. There was a real need to consider the appropriateness of courses other than the immediate imposition of a term of imprisonment. For all of these reasons, the sentences imposed on the appellant were manifestly excessive.
Other grounds
56 The appellant’s amended notice of appeal raised the question of parity in sentencing, in relation to charge 37, the charge of manufacturing infringing products at the Roper Street factory. Instead of attempting to draw a comparison with the sentence imposed on Victoria Vaysman, as had been done before the primary judge, counsel for the appellant invoked a comparison with the sentences imposed on Vladimir Vaysman and on Leonid Mykhalovski. Both the appellant and Mr Mykhalovski were present at the Roper Street factory on 12 December 2007, when a search order was executed. There were no findings as to the extent to which either was engaged in manufacturing. Mr Mykhalovski was sentenced to three months’ imprisonment, whereas the appellant was sentenced to nine months’ imprisonment on charge 37. Vladimir Vaysman was not charged with manufacturing infringing products during the relevant period, but with causing them to be manufactured. The primary judge appeared to accept that Vladimir Vaysman was in charge of the overall operation. At [43] of his reasons for judgment in Deckers (No 9), his Honour accepted that Vladimir Vaysman oversaw the operations at Roper Street and Christensen Street and was the main offender. He was sentenced to six months’ imprisonment on that charge. In these circumstances, comparisons as to parity are difficult. Whether the appellant should have been given the same sentence as Vladimir Vaysman, or a lesser sentence, when the elements of the charges differed is problematic. So is a comparison between the degree of responsibility of Mr Mykhalovski who was an employee, as against that of the appellant, who was in charge when Vladimir Vaysman was not present. It is difficult to see how the extra degree of responsibility warranted a sentence three times longer than that given to Mr Mykhalovski. In my view, however, the sentences imposed on all three were excessive.
57 The amended notice of appeal also raised the question whether the primary judge failed to take into account the appellant’s age and state of health in fixing the head sentence, but only took it into account in determining that he should serve no more than six months and the balance should be suspended. The fact that the primary judge mentioned age and health specifically in relation to the actual serving of the first six months and the suspension of the remainder of the sentence, at [48] of his reasons for judgment in Deckers (No 9), provides no ground for saying that he ignored these factors in fixing the head sentence.
58 The third ground in the amended notice of appeal referred to the manner in which his Honour dealt with the question of previous good character. After reciting the evidence about good character at [28] of Deckers (No 9), his Honour held at [29] that the appellant’s claim to have been of good character was undermined by his conduct in relation to the charges. It is not clear whether his Honour was diminishing the weight given to previous good character by reference to the conduct in offending (which would have amounted to error), or was merely balancing good character against the circumstances of the contempts. The first sentence of [29] suggests that a balancing exercise was being undertaken.
59 The fourth ground of appeal advanced was that the appellant had been punished doubly, because of the overlap between charges 36 and 37 and between charges 4 and 5. This ground cannot be made out. Each of charges 37 and 4 related to manufacture, whereas charges 36 and 5 related to sale of infringing products. Any overlap was properly dealt with in the application of the totality principle. Although he did not say so specifically, the primary judge appears to have applied the totality principle in ordering that the sentences be served concurrently and in fixing the time the appellant should actually serve and the time for which his sentence would be suspended.
60 The fifth ground in the amended notice of appeal referred to what the primary judge said at [40] of his reasons for judgment:
The amended charges were laid on 14 March 2008. The gravity of his offending was compounded when, on 5 July 2008, he instructed senior counsel who then appeared on his behalf to advise the Court that he and his wife had “never intended to break the [November 2007] orders and certainly intend to abide by the orders of the Court in the future … They are completely prepared to make further undertakings to abide by Court orders”: see Deckers (No 7) at [11]. Despite these assurances he continued to produce counterfeit products at Christensen Street.
His Honour seems to have construed this statement as amounting to an admission that the appellant had acted in breach of court orders and as an assurance that he would change his ways. When the transcript of the proceeding is examined, it rather appears that the statement was intended to be exculpatory. What effect this construction would have had on his Honour’s view as to the gravity of the appellant’s conduct in relation to charges 4, 5 and 12 cannot be known.
The exercise of the discretion
61 The fact that the sentences imposed by the primary judge are manifestly excessive means that his Honour’s exercise of the sentencing discretion has miscarried. It is open to this Court, upon allowing the appeal, either to remit the matter to the primary judge for him to exercise the discretion again, or for this Court to exercise it afresh. The appellant has been released from custody by order of the Court, made at the conclusion of the hearing of the appeal. In making that order, a majority of the Court has already embarked upon the exercise of the discretion itself. It would be inappropriate now to remit the matter to the primary judge.
62 If I had been sentencing the appellant, I should have taken a much less serious view of the gravity of the appellant’s defiance of the court orders than the primary judge did. On a comparison of the appellant’s acts and omissions with those dealt with in the other cases in the table the respondent placed before the primary judge, the appellant’s are relatively low on the overall scale. The orders that he contravened, or failed to comply with, do not attract the degree of public interest in compliance with them that orders designed to protect the public have. The requirements of vindication of the Court’s authority, specific deterrence and general deterrence can all be satisfied by penalties substantially lower than those imposed for contempt of this Court at the top of the range. The appellant is a 74 year old with an unblemished record. Notwithstanding that he is bankrupt, for these reasons, I would regard imprisonment as inappropriate to reflect the gravity of the contraventions of, and failures to comply with, the Court’s orders. It would be appropriate to deal with each contempt by a fine, where the power to fine exists.
63 In the circumstances, I regard the following fines as appropriate. Charge 37, the charge of manufacturing infringing products at the Roper Street factory, deserves a fine of $15,000. In respect of charge 36, the charge of selling infringing products manufactured at the Roper Street factory, a fine of $10,000 is appropriate. The fact that those charges were pending when the appellant was manufacturing infringing items at the Christensen Street factory, and then selling those items, means that charges 4 and 5 should carry higher penalties of $30,000 and $20,000 respectively. For charge 12, the charge of entering the Christensen Street factory, a fine of $5,000 is warranted. In respect of each of charges 52, 55, 57, 61 and 67, I would impose no penalty. Because the failures to comply with the respective orders were not wilful, there must be some doubt as to whether there is power to fine for contempt. See Australasian Meat Industry Employees’ Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 106-113 per Gibbs CJ, Mason, Wilson and Deane JJ. Each of the charges is too trivial to warrant any term of imprisonment being imposed. The fines total $80,000. Because the conduct the subject of all of the charges was related, in the application of the totality principle, I would reduce the total fine from $80,000 to $50,000.
64 If I had been sentencing the appellant as the primary judge, the fact that he is bankrupt would have led me to impose a default term of imprisonment, which would be applicable after the appellant had had a substantial period to see if he could obtain the money to pay the fines. If he were able to pay part of the fines, he ought to be entitled to a reduction in the default term. I would have allowed the appellant six months in which to pay the fines, and imposed a term of imprisonment of 50 days in the event of non-payment. For each $1,000 of the fines the appellant paid, I would have ordered that his term of imprisonment in default be reduced by one day. In the events that have occurred, however, there is no point in substituting for the orders made by the trial judge all of the orders I would have made. The appellant has served approximately 50 days in prison, before being released by order of the Court on 5 November 2010. Because he has in effect served what would have been his default sentence, it would be unrealistic now to fine him and to allow him time in which to pay fines. He has expiated his fines by serving his sentence of imprisonment. There should be an order making it clear that the term of imprisonment actually served by the appellant between 15 September 2010 and 5 November 2010 should be regarded as taking the place of the fines.
The appropriate orders
65 I would allow the appeal and set aside orders 3, 4 and 5 of the orders made by the primary judge on 15 September 2010. I would substitute orders reflecting what I have said in [63]-[64] above.
66 The respondent appeared on the appeal to oppose any change in the sentences. The submissions of its counsel were of assistance to the Court, but it is nonetheless the losing party. Counsel for the respondent conceded that, in the event that the appeal were allowed, the respondent should be ordered to pay the appellant’s costs. In my view, such an order should be made. In this respect, I differ from the views of Besanko J and Bromberg J.
I certify that the preceding sixty-six (66) numbered paragraphs are a true copy of the reasons for judgment herein of the Honourable Justice Gray. |
Associate:
IN THE FEDERAL COURT OF AUSTRALIA | |
VICTORIA DISTRICT REGISTRY | |
GENERAL DIVISION | VID 858 of 2010 |
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA |
BETWEEN: | JOSEPH VAYSMAN Appellant
|
AND: | DECKERS OUTDOOR CORPORATION INC. Respondent
|
JUDGES: | GRAY, BESANKO AND BROMBERG JJ |
DATE: | 16 FEBRUARY 2011 |
PLACE: | MELBOURNE |
REASONS FOR JUDGMENT
BESANKO J
67 This is an application for an extension of time within which to file and serve a notice of appeal against orders made by a judge of this Court on 15 September 2010 and, if an extension is granted, an appeal against those orders. On 14 October 2010, another judge of this Court made an order that the hearing of the application for an extension of time in which to file and serve a notice of appeal and any appeal be expedited and heard by a Full Court concurrently.
68 The application for an extension of time within which to file and serve a notice of appeal should be granted. The delay is a matter of a few days and arose as a result of a miscalculation of the time period by the appellant’s solicitors.
69 In my opinion, the appeal should be allowed and certain orders made by the primary judge on 15 September 2010 should be set aside.
Background and Orders Made
70 The appellant was charged with contempt of court. The contempt of court consisted of breaches of orders of the Court. The first set of charges laid against the appellant were filed on 14 March 2008 and the second set of charges were filed on 11 March 2009.
71 The contempt proceedings arose out of proceedings for alleged trade mark infringement, copyright infringement, passing off and breaches of the Trade Practices Act 1974 (Cth) which dated back to 2003. Over this period, the Court made a series of orders which restrained various respondents, including the present appellant, from engaging in the manufacture, distribution and sale of counterfeit footwear which bore the “Ugg” logo.
72 On 26 November 2007, a number of respondents including the appellant, Millhouse Pty Ltd, HGU Pty Ltd, and Taskinc Pty Ltd were each ordered to swear an affidavit as to their assets. The appellant was a director of the companies I have identified. The orders enabled a respondent to object to complying with the order if compliance might tend to incriminate him, her or it, or to make him, her or it liable to a civil penalty.
73 On 27 November 2007, the Court made orders relating to what were described as the “Enjoined Products”. In essence, the expression referred to footwear which bore the “Ugg” logo or elements of it. I will not set out the terms of the orders made on 27 November 2007. It is sufficient to say that the appellant was restrained personally, or acting through others, from manufacturing, distributing, disposing of or selling the Enjoined Products or procuring or inducing any other person to do so.
74 On 14 December 2007, the Court ordered that Vernon Co Pty Ltd swear an affidavit setting out its assets. The appellant was a director of Vernon Co Pty Ltd.
75 On 27 January 2009, the Court ordered that the appellant be restrained from approaching within 100 metres of premises at 34 Christensen Street, Moorabbin in the State of Victoria.
76 On 23 April 2010, the appellant was found guilty on seven charges of engaging in conduct in breach of orders of the Court: Deckers Outdoor Corporation Inc v Farley (No 6) [2010] FCA 391 (“Deckers (No 6)”).
77 On 7 June 2010, the appellant was found guilty on three charges of engaging in conduct in breach of orders of the Court: Deckers Outdoor Corporation Inc v Farley (No 7) [2010] FCA 560 (“Deckers (No 7)”).
78 Charges were also laid and found proven against a number of other parties including one Leonid Mykhalovskyi, the appellant’s son (Vladimir Vaysman) and the appellant’s daughter (Victoria Vaysman). The sentences imposed on those persons and the primary judge’s reasons for imposing those sentences are set out in Deckers Outdoor Corporation Inc v Farley (No 8) [2010] FCA 657 (“Deckers (No 8)”).
79 The sentences under appeal and the reasons therefor are set out in Deckers Outdoor Corporation Inc v Farley (No 9) [2010] FCA 1007 (“Deckers (No 9)”). In those reasons, the primary judge summarised the substance of the ten charges he found proved against the appellant as follows:
• Charge 36 - In contravention of orders made by the Court on 27 November 2007, Mr Vaysman provided counterfeit footwear to a person at the Moorabbin factory. This occurred on 7 December 2007 and the footwear was offered for sale on the next day by that person at the Queen Victoria Market.
• Charge 37 - Between 27 November 2007 and 12 December 2007 Mr Vaysman continued to manufacture counterfeit footwear at the Moorabbin factory in contravention of the orders made on 27 November 2007.
• Charge 52 - Orders made by the Court on 26 November 2007 required Mr Vaysman to file an affidavit of his assets. He failed to do so in the required time.
• Charges 55, 57, 61 and 67 - Mr Vaysman failed to cause four companies of which he was the sole director to comply with orders made by the Court requiring those companies to file affidavits as to their assets.
• Charge 4 - Between March 2008 and January 2009 Mr Vaysman continued to manufacture counterfeit products at another factory in Moorabbin. In doing so he contravened orders made by the Court on 27 November 2007.
• Charge 5 - Between March 2008 and January 2009 Mr Vaysman sold counterfeit products which he had made in the newly established factory. In doing so he also contravened the orders made on 27 November 2007.
• Charge 12 - On 5 March 2009 Mr Vaysman breached an order of the Court, made on 21 January 2009, that he not approach within 100 metres of the new factory. He persuaded the landlord’s agent to give him a key to the premises and used it to enter the factory. He was, by chance, observed leaving between 8:00 and 9:00 pm at night.
80 Charges 36, 37, 52, 55, 57, 61 and 67 were in the first set of charges filed on 14 March 2008 and charges 4, 5 and 12 were in the second set of charges filed on 11 March 2009.
81 The primary judge imposed a sentence of imprisonment with respect to each of the charges. The details are as follows:
• Charge 36 – two months’ imprisonment.
• Charge 37 – nine months’ imprisonment.
• Charge 52 – one month’s imprisonment.
• Charge 55 – one month’s imprisonment.
• Charge 57 – one month’s imprisonment.
• Charge 61 – one month’s imprisonment.
• Charge 67 – one month’s imprisonment.
• Charge 4 – 18 months’ imprisonment.
• Charge 5 – six months’ imprisonment.
• Charge 12 – three months’ imprisonment.
82 The primary judge ordered that each sentence be served concurrently with each other sentence. He ordered that the appellant be imprisoned for a period of 18 months with the first six months being served in any event and the balance of the sentence being suspended from execution on condition that the appellant refrain from contravening any of the orders made by the Court on 27 November 2007 and 21 January 2009 and binding on him for a period of two years from the date on which the suspension takes effect.
83 The primary judge made it clear when sentencing Mr Mykhalovskyi, Mr Vladimir Vaysman and Ms Victoria Vaysman that he understood that imprisonment was penalty of last resort (Deckers (No 8) at [8], [18]). Nevertheless, in the case of the appellant he was faced with a serious case of contempt. One need only compare the essential elements of Charges 37 and 4. The same act is involved, namely, manufacturing, but it is during different periods and at different factories. The primary judge made clear factual findings that the appellant knew and understood the terms of the Court orders at all relevant times. The appellant continued to manufacture the counterfeit footwear after he had been served with the first set of charges filed on 14 March 2008. The breach identified in Charge 37 (first set of charges) was committed at a factory in Roper Street, Moorabbin, and the breach identified in Charge 4 (second set of charges) was committed at a different factory at Christensen Street, Moorabbin. The primary judge found that the respondent only became aware of the activities at the Christensen Street factory in late 2008 or early 2009.
84 The appellant’s counsel in the Court below and his counsel before this Court did not argue that the appellant had not committed serious offences which warranted a term of imprisonment being imposed (see Deckers (No 9) at [19], [45]). As counsel in the Court below said in his written submissions to the primary judge, “the conduct of the respondent [appellant before this Court] was serious and a term of imprisonment is required”. On the appeal to this Court, the appellant argued that the sentence of imprisonment should have been for a lesser period than 18 months and that any sentence imposed on him should have been “fully suspended”. Furthermore, subject to a suggestion that the primary judge may have found that the appellant was not fully aware between March 2008 and January 2009 that what he was doing was wrong, I did not understand the appellant to challenge any finding of primary fact made by the primary judge.
The primary judge’s reasons
85 The primary judge referred to an affidavit filed by the appellant shortly before the hearing on penalty. He referred to a number of medical reports tendered and relied upon by the appellant. He did that in the context of considering the significance of the appellant’s age and general health problems.
86 The appellant is 74 years old. His general practitioner, Dr G Belkin, referred to the appellant’s “main problems” as atrial fibrillation (heart rhythm disorder), prostatomegaly (benign age-related enlargement of the prostate gland), gastritis/duodenitis, impaired feeling [sic] of smell, impaired hearing which had worsened after a motor car accident in 2008, tinnitus, reactive anxiety/depression and incidental acute respiratory, macular and skin problems. Dr Belkin stated that apart from the appellant’s tinnitus condition, his other conditions had improved under treatment.
87 Dr P O’Brien investigated complaints by the appellant that he had a poor memory. He referred the appellant to a neuropsychologist for further testing and diagnosis. The neuropsychologist reported that the testing did not disclose any evidence of a neurodegenerative disease. There was evidence of stress and some variability of cognitive performance when the appellant was anxious. Dr O’Brien suggested that supportive measures to assist the appellant to deal with his distractibility and stress, his sleep disturbance and tinnitus would be likely to improve his condition.
88 Dr B Goloub is a psychologist. He examined the appellant and found that he suffered from anxiety and stress and that he also suffered from panic attacks. The appellant made various statements to Dr Goloub about his understanding of the court proceedings.
89 Mr J Cummins is a consulting clinical and forensic psychologist. He examined the appellant. The appellant made various statements to him about the court proceedings. Mr Cummins was not persuaded that the appellant was being truthful about his claims of memory loss. He considered that the appellant presented “as being of normal and average intellectual ability” and he considered that the appellant was “in a state of denial concerning his legal situation …”. Mr Cummins expressed the opinion that the appellant had developed a chronic adjustment disorder with mixed disturbance of emotions and conduct.
90 The primary judge considered a submission made by the appellant’s counsel that the appellant would find it more difficult to serve a sentence of imprisonment than a younger person because of his age and his medical and psychological problems. In addition, the appellant’s counsel submitted that there would be no interpreter to assist the appellant to communicate in prison and he would be separated from his wife of 50 years.
91 The primary judge referred to four decisions of the Victorian Court of Criminal Appeal dealing with the significance in sentencing of an offender’s age and state of health. He said that there was no doubt that the appellant suffered from a number of medical conditions. However, apart from the tinnitus, those conditions had responded to treatment. The primary judge noted that Dr O’Brien considered that the tinnitus was also manageable if the appellant were to adopt various supportive measures which he had suggested. The primary judge noted that none of the medical reports offered an opinion as to the likely effect of incarceration on any of the conditions from which the appellant suffered. In particular, Mr Cummins did not suggest that a chronic adjustment disorder would have any adverse impact on the appellant should he be imprisoned. The primary judge noted that none of the appellant’s medical problems prevented him from working between 2007 and 2009, and he considered that had the appellant’s activities at the Christensen Street factory not been discovered, he would probably still be working on the premises producing footwear.
92 The primary judge found that the appellant was agitated and anxious as a result of being found guilty of a number of charges of contempt of court and that he was naturally apprehensive about the prospect of a term of imprisonment being imposed. The primary judge found that there was no evidence that he was seriously ill or any evidence to support the proposition that ill health would make any period of incarceration imposed on him “particularly onerous”. Furthermore, the primary judge said that the case was not one in which the appellant would be expected to spend most of his remaining years in custody.
93 The primary judge concluded his analysis of the significance of the appellant’s age and ill health with the following observations (at [27]):
On the other hand it is necessary, in sentencing Mr Vaysman, to take into account his age, his infirmity and the language and cultural issues which will be likely to have an adverse impact on him if he is imprisoned. While these considerations do not, in my opinion, justify a wholly suspended sentence, they may warrant a partially suspended sentence.
94 The primary judge then turned to consider a submission by the appellant that his previous good character should be taken into account. The primary judge said that it was proper to take into account in the appellant’s favour the fact that he had no prior convictions and that he had come to Australia in difficult circumstances as a refugee immigrant and had, by dint of hard work, been able to live a good and productive life. He had raised a small family and been a good provider for them.
95 However, the primary judge said that those matters had to be balanced against other aspects of the appellant’s conduct in the course of the present litigation. He noted that the appellant had given a considerable amount of untruthful evidence to the Court relating to his involvement in the manufacturing business conducted by his son and in relation to his financial circumstances. The appellant had claimed, for example, to be impecunious when he had accumulated pension payments standing to his credit in a bank account which had not been drawn on for many years. He had assisted his son by acting as the sole director of a number of companies which served as vehicles for the conduct of various aspects of the business and he had operated bank accounts for some of these companies. Hundreds of thousands of dollars passed through these accounts. The appellant had personally made and sold counterfeit footwear. The primary judge said that such conduct “clearly undermines his claim to be of character”.
96 The primary judge then turned to consider whether delay was a mitigating factor in favour of the appellant. The primary judge said that it was to be acknowledged that the contempt proceedings had been hanging over the appellant for some time. He referred to the factors which had led to the delay in bringing the proceedings to a conclusion. In the result, the primary judge placed little weight on the appellant’s complaints relating to delay. Nor was he persuaded that the appellant had personally been deterred from misconduct by reason of the charges being preferred against him. On the other hand, he took into account in the appellant’s favour the absence of any contraventions of the Court’s orders since the second set of charges were laid.
97 The primary judge then turned to consider the financial effect of the proceedings on the appellant and his family. The primary judge noted that unpaid judgment debts arising from the orders made in the principal proceeding had led to the appellant being declared bankrupt. The appellant had lost the equity in his family home.
98 On the other hand, the primary judge noted that some hundreds of thousands of dollars had flowed through accounts over which the appellant had control as the registered signatory and that the appellant had failed to account for any of this money. The primary judge noted that on 13 March 2009 he had explicitly invited the appellant to explain how he had come by such large sums and what he had done with them. No explanation had been forthcoming. The primary judge noted that the appellant had repeatedly failed to comply with orders which required him to make full disclosure of his personal financial situation and that of companies associated with him. The primary judge considered that in the absence of such disclosure the appellant was not entitled to any allowance being made for the financial position in which he found himself.
99 The primary judge then turned to consider the question of parity. The submission put to him was that he had sentenced the appellant’s daughter, Victoria Vaysman, to be imprisoned for a period of 12 months for contempt of court (Deckers (No 8) at [20]-[49]). He had decided that the first two months were to be served and the balance suspended on condition that she refrain from further contraventions of the Court’s orders for a period of two years. The appellant submitted that considerations of parity required that the appellant be treated more leniently than his daughter.
100 The primary judge did not accept that the appellant’s offending was less serious than his daughter. The primary judge said (at [40]):
The most egregious breaches of the Court’s orders which led to the laying of Charges 4, 5 and 12 against Mr Vaysman in 2009, were far more serious than any of the conduct engaged in by Victoria Vaysman. After the manufacturing operations at the Roper Street factory had been discovered at the end of 2007 and the production process was effectively closed down, Mr Vaysman wished to continue manufacturing counterfeit footwear. He sought and obtained the assistance of Vladimir to establish a new factory at Christensen Street Moorabbin. The premises were leased by Sanauria Pty Ltd (“Sanauria’), a company of which Mr Vaysman was the sole director. He entered into the lease on behalf of Sanauria on 28 February 2008. Machinery was installed and production of counterfeit footwear soon resumed. Mr Vaysman purchased the machinery for use at Christensen Street. He continued to operate the business at Christensen Street until he was discovered in January 2009. He did so despite having been served with an amended statement of charges in respect of his earlier conduct at Roper Street. The amended charges were laid on 14 March 2008. The gravity of his offending was compounded when, on 5 July 2008, he instructed senior counsel who then appeared on his behalf to advise the Court that he and his wife had “never intended to break the [November 2007] orders and certainly intend to abide by the orders of the Court in the future … They are completely prepared to make further undertakings to abide by Court orders”: see Deckers (No 7) at [11]. Despite these assurances he continued to produce counterfeit products at Christensen Street.
101 The primary judge then turned to consider other considerations. He said that he was far from satisfied that the appellant acknowledged and accepted that he had contravened orders made by the Court. He referred to evidence before him in which the appellant sought to place the blame on others.
102 The primary judge said that the appellant had, since November 2007, consistently chosen to ignore orders made by the Court. In November and December 2007, he had blatantly continued manufacturing counterfeit footwear at the Roper Street factory until his activities were discovered and he was no longer able to work at that factory. He then contrived to resume manufacturing at the Christensen Street premises and was able to do so for a year before he was discovered producing fake Ugg products. The primary judge said (at [43]):
While I accept that Vladimir Vaysman oversaw the operations at Roper Street and Christensen Street and was the main offender, Mr Vaysman played a central role in the illicit business by applying his skills to the manufacture of counterfeit products.
103 The primary judge considered that as was the case with Vladimir Vaysman, the need for both personal and general deterrence ranked highly as considerations in the sentencing of the appellant.
104 The primary judge set out the sentences which he imposed. He considered that Charge 4 was the most serious offence and that it warranted a sentence of imprisonment of 18 months. He ordered that the other penalties be served concurrently with each other sentence, including that imposed in relation to Charge 4. He said (at [48]):
Having regard to Mr Vaysman’s age and his indifferent health I will require that he serve six months’ imprisonment and will suspend from execution the remaining period of the sentence.
Issues on the appeal
105 There are six grounds in the Amended Notice of Appeal. In the first five grounds the appellant seeks to identify specific errors by the primary judge and in the sixth ground of appeal the appellant raises a general ground that the individual sentences, total effective sentence and period of sentence not held in suspense were manifestly excessive.
106 The appellant accepted that in order to succeed he must show that the primary judge made an error of the type identified in House v The King (1936) 55 CLR 499 at 505 (see Dinsdale v The Queen (2000) 202 CLR 321).
107 The appellant’s first ground of appeal is that the primary judge erred “in his application of the sentencing principle of parity”.
108 There was no dispute between the parties as to the role parity may play in the sentencing process: see Lowe v The Queen (1984) 154 CLR 606 (“Lowe”).
109 The appellant did not challenge the primary judge’s conclusions concerning the significance of the sentence passed in relation to Ms Victoria Vaysman (see [100] above). He sought to raise what appeared to be a new argument to the effect that there was an unjustified disparity between the sentence imposed on Mr Vladimir Vaysman and the sentence imposed on Mr Mykhalovskyi on the one hand and the sentence imposed on the appellant on the other. The need for the primary judge to have regard to the sentences imposed on Mr Vladimir Vaysman and Mr Mykhalovskyi does not appear to have been raised before him.
110 In response to this argument the respondent referred to Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 438 per Latham CJ, Williams and Fullagar JJ, O’Brien v Komesaroff (1982) 150 CLR 310 at 319 per Mason J (as his Honour then was) and Coulton v Holcombe (1986) 162 CLR 1 at 7-8 per Gibbs CJ, Wilson, Brennan and Dawson JJ. However, those cases are not directly relevant because this is not a claim, defence or new argument in a civil case which is raised for the first time on appeal. The primary judge sentenced Mr Vladimir Vaysman and Mr Mykhalovskyi. There is no suggestion of evidence not being called that might otherwise have been given. In the circumstances, I would allow the appellant to raise the argument.
111 The appellant’s argument relates to Charge 37, in respect of which the primary judge imposed a sentence of nine months’ imprisonment.
112 In Deckers (No 8), the primary judge summarised Charge 32 against Mr Vladimir Vaysman as follows (at [9]) :
Between 27 November 2007 and 12 December 2007 Mr Vaysman permitted and caused the factory in Roper Street Moorabbin to be used for importing, exporting, manufacturing, distributing and selling counterfeit footwear. He did so in breach of an undertaking which he gave to the Court on 27 November 2007.
The primary judge found this charge proved and imposed a sentence of six months’ imprisonment.
113 In Deckers (No 8) (at [50]), Charge 41 against Mr Mykhalovskyi was summarised by the primary judge as follows:
Between 27 November 2007 and 12 December 2007 Mr Mykhalovskyi manufactured counterfeit footwear at the Roper Street factory in Moorabbin in contravention of the orders made by the Court on 27 November 2007.
The primary judge found this charge proved and imposed a sentence of three months’ imprisonment.
114 In my opinion, the appellant’s argument, in so far as it is based on a comparison between the sentence imposed on him and the sentence imposed on Mr Mykhalovskyi, fails. The primary judge found that Mr Mykhalovskyi’s contribution to the Vaysman “family business” involved no more than the contribution of his labour at the factory and, possibly, the transportation on occasion of counterfeit products to the Queen Victoria Market where the footwear was sold. There was nothing to suggest that Mr Mykhalovskyi exercised any form of supervision or control over the activities carried out at the factory in Roper Street. I do not think there is a relevant comparison between the sentence imposed on the appellant in relation to Charge 37 and that imposed on Mr Mykhalovskyi in relation to Charge 41 or that any such comparison suggests that the sentence imposed on the appellant was manifestly excessive.
115 The sentence imposed on Mr Vladimir Vaysman in relation to Charge 32 stands in a different position. I think that in imposing a sentence on the appellant in relation to Charge 37 the primary judge should have had regard to the sentence imposed on Mr Vladimir Vaysman in relation to Charge 32. It is true, as the respondent points out, that the charge against Mr Vladimir Vaysman relates to permitting and causing the factory to be used for importing, exporting, manufacturing and distributing, and selling counterfeit footwear whereas the charge against the appellant relates to the manufacturing of counterfeit footwear at the Moorabbin factory in contravention of the orders made by the Court on 27 November 2007. Nevertheless, each charge relates to the same period of time, the same place and, although indirectly in the case of Mr Vladimir Vaysman, the same activity, namely the manufacturing of counterfeit footwear. In my opinion, a Court passing sentence on Charge 37 against the appellant ought to have regard to the sentence imposed on Mr Vladimir Vaysman with respect to Charge 32.
116 In Deckers (No 8), the primary judge found that Vladimir Vaysman was the person who exercised overall control of what was a significant commercial operation. He noted that other members of his family were involved in varying roles and to varying degrees in the production, sale and distribution of counterfeit footwear. The primary judge made the following findings (at [11]):
The operation had its origins in Mr Vaysman’s father, Josef Vaysman’s, ability to manufacture what he considered to be a genre of footwear, namely, Ugg Boots. He made these boots and sold them at public markets. Sometime earlier than 2003 Vladimir Vaysman came to appreciate the market potential for sales of this footwear more widely in Australia and overseas. He also appears to have come to the view that this marketing potential would be enhanced if the footwear was presented using the Applicant’s established getup.
117 The primary judge went on to say with respect to Vladimir Vaysman (at [18]):
This is one of the worst cases of contempt to have come before the Court. Mr Vaysman has deliberately and repeatedly contravened undertakings given by him to the Court and orders of the Court over a four year period. The need for both personal and general deterrence ranks highly in the sentencing process. Not only have the Applicant’s rights been seriously infringed, the authority of the Court has been severely undermined. Mr Vaysman’s conduct falls within the most serious category of criminal contempt cases. Although a sentence of imprisonment is a last resort, nothing less would be appropriate in the circumstances of the present case.
118 Furthermore, in the judgment under appeal (Deckers (No 9)), the primary judge said (at [43]):
While I accept that Vladimir Vaysman oversaw the operations at Roper Street and Christensen Street and was the main offender, Mr Vaysman [ie, the appellant] played a central role in the illicit business by applying his skills to the manufacture of counterfeit products.
(Emphasis added.)
119 In my opinion, proper considerations of parity required that the sentence imposed on the appellant in relation to Charge 37 be no greater than the sentence imposed on Mr Vladimir Vaysman in relation to Charge 32. I think that as they presently stand there is what Mason J (as his Honour then was) referred to in Lowe (at 611) as a marked disparity between the sentences.
120 The respondent submitted that even if the primary judge erred with respect to the sentence he imposed in relation to Charge 37, that did not affect the sentence of imprisonment of 18 months he imposed with respect to Charge 4. All other penalties, including that imposed in relation to Charge 37, were to be served concurrently with each other sentence. On the face of it, that submission seems to be correct. However, it is not clear that the primary judge did not take all the sentences into account in deciding that the appellant should serve six months’ imprisonment. In those circumstances, there has been an error in the sentencing process. I do not need to consider whether the error affects the period of 18 months’ imprisonment because there was another error in the sentencing process. The decision in Duncan v The Queen [2010] VSCA 92 suggests that in the circumstances as I have found them to be the appellant must be re-sentenced.
121 The second ground of appeal is that the primary judge erred “by failing properly to take into account the age and ill health of the appellant”.
122 The appellant is 74 years of age. He has a number of health problems and I have referred to the medical evidence summarised by the primary judge (at [86]-[89]).
123 In R v Smith (1987) 44 SASR 587, King CJ (with whom Cox and O’Loughlin JJ agreed) said (at 589):
The state of health of an offender is always relevant to the consideration of the appropriate sentence for the offender. The Courts, however, must be cautious as to the influence which they allow this factor to have upon the sentencing process. Ill health cannot be allowed to become a licence to commit crime, nor can offenders generally expect to escape punishment because of the condition of their health. It is the responsibility of the Correctional Services authorities to provide appropriate care and treatment for sick prisoners. Generally speaking ill health will be a factor tending to mitigate punishment only when it appears that imprisonment will be a greater burden on the offender by reason of his state of health or when there is a serious risk of imprisonment having a gravely adverse effect on the offender’s health.
See R v Van Boxtel (2005) 11 VR 258; Bailey v Director of Public Prosecutions (1988) 78 ALR 116; 34 A Crim R 154.
124 As to the second matter identified by King CJ (that is, the risk of imprisonment having a gravely adverse effect on the offender’s health) the primary judge found that there was no evidence to support any conclusion about the likely effect of incarceration on any of the conditions from which the appellant suffers. It seems to me that having regard to the evidence that finding must stand.
125 However, in relation to the first matter identified by King CJ (that is, whether imprisonment will be a greater burden on the offender by reason of his state of health) I think, with respect, that the primary judge erred.
126 First, I do not think that the burden must be “particularly onerous” (see [92] above) before ill health becomes relevant. It may be of less significance if it is not particularly onerous, but it is still relevant if it would impose a greater burden on the appellant.
127 Secondly, the appellant’s age and state of health were relevant to the sentence of imprisonment and not just the determination of the period he should spend in prison. That may not be so in some cases but it seems to me that this is a case where it was relevant to both issues. It is not clear whether the primary judge took the appellant’s age and state of health into account in fixing a sentence of imprisonment of 18 months on Charge 4. He certainly took those matters into account in determining the period the appellant should spend in prison (see [104] above).
128 Thirdly, even if the primary judge did take the appellant’s age and state of health into account in fixing the sentence of 18 months’ imprisonment, I think, with respect, he erred because such a sentence is manifestly excessive. Before the primary judge the respondent put forward a schedule showing the penalties imposed by this Court in other contempt cases. I append to these reasons a list of those cases. I accept of course that no two cases are alike and that this case is a serious case of contempt of court. The schedule shows that in no case has a penalty in excess of 12 months been imposed. Of course a particular case may warrant a penalty well in excess of that period (as did the case of Mr Vladimir Vaysman), but I cannot but reach the conclusion that, in the case of a 74-year-old man with some health problems, a sentence of 18 months’ imprisonment is manifestly excessive.
129 The third ground of appeal is that the primary judge erred “by failing properly to take into account the appellant’s past good character”. The primary judge clearly took into account the appellant’s previous good character. However, the appellant submitted that the primary judge impermissibly allowed the circumstances of the offending to negate the appellant’s previous good character. He referred to McHugh J’s identification of a two-stage process in Ryan v The Queen (2001) 206 CLR 267 at 278-9 [36].
In considering a prisoner’s good character when sentencing, the Court must distinguish two logically distinct stages. First, it must determine whether the prisoner is of otherwise good character. In making this assessment, the sentencing judge must not consider the offences for which the prisoner is being sentenced. Secondly, if a prisoner is of otherwise good character, the sentencing judge must take that fact into account. However, the weight that must be given to the prisoner’s otherwise good character will vary according to all of the circumstances of the case.
130 The appellant submitted that the primary judge erred because in determining whether the appellant was otherwise of good character he took into account the “offences” with which the appellant had been charged.
131 I have considered carefully the primary judge’s reasons and on one view he did take into account the circumstances of the breaches of the Court orders in determining whether the appellant was otherwise of good character. On another view, he took the appellant’s good character into account and weighed it against other aspects of the appellant’s conduct and character. I am disposed to think that if there was an error it was an insignificant one.
132 The fourth ground of appeal is that the primary judge erred “by doubly punishing the appellant”. The appellant submitted that to punish him separately for acts of manufacture and acts of sale was, in the circumstances, to punish him twice. This had occurred, so it was submitted, in the case of Charges 36 and 37 and in the case of Charges 4 and 5. The appellant submitted that the respondent suffered damage only upon the sale of the goods. Goods must be manufactured before they are sold. In the circumstances, the appellant should not have been the subject of two significant penalties for what was in effect one activity.
133 There is force in the appellant’s submission, and it may be that other judges may have imposed lesser sentences having regard to the consideration identified by the appellant. However, that is not the test. The acts of manufacture and sale are separate acts and the primary judge was entitled to take the approach he did.
134 The fifth ground of appeal is that the primary judge erred:
… by failing properly to take into account the facts that when the appellant committed the acts forming Charge 4, (a) he had already been served with amended charges relating to his having earlier offended at the Roper Street factory, and, (b) had assured the Court through his counsel that he had never intended to breach Court orders and would abide by orders of the Court into the future.
135 The submission of the appellant with respect to this ground of appeal was that the primary judge placed too much weight on the fact that at the time of committing the acts constituting Charge 4, the appellant was facing charges relating to his earlier conduct and on the statements his pro bono senior counsel made to the Court on 5 July 2008. As I understood the submission it was that the appellant may not have understood or appreciated to the full extent the unlawfulness of his conduct at the time he committed the acts comprising Charge 4. It was pointed out that at that time of the conduct constituting Charge 4 the appellant had not been found guilty of the earlier charges. Furthermore, it was submitted that there was some support for the view that the appellant did not fully appreciate the unlawfulness of his conduct in the primary judge’s statement that he was far from satisfied that the appellant acknowledged and accepted that he had contravened orders made by the Court (see [101] above).
136 I reject this ground of appeal. The primary judge clearly found that the appellant was aware of the orders which had been made and that his conduct was deliberate. Those were his findings in Deckers (No 7) at [11] and [20]-[21]. There is no basis upon which this Court can or should interfere with those findings.
137 The final ground of appeal is that “the individual sentences, total effective sentence and period of sentence not held in suspense are manifestly excessive”. I do not need to deal with this ground of appeal in light of my earlier conclusion that there have been errors in the sentencing process and the appellant must be re-sentenced.
Re-sentencing the appellant
138 I see no reason why this Court should not re-sentence the appellant. Neither party suggested that there was any further evidence they wished to call.
139 The conduct comprising Charge 4 is very serious contempt of court. The appellant continued manufacturing counterfeit footwear after becoming aware of the orders and of charges involving earlier breaches of the orders. In fact, there was a trial in relation to those earlier charges over nine days in April and May 2008 (Deckers (No 6)).
140 I agree with the primary judge that the need for personal and general deterrence ranks highly as a consideration in the sentencing of the appellant. In addition, I have taken into account the appellant’s age and state of health, the appellant’s previous good character, considerations of parity and the other matters referred to by the primary judge and in respect of which there was no complaint. I have also taken into account the sentences imposed in other cases to which the Court was referred.
141 Having regard to these considerations and, in particular, to the appellant’s age and health, I would impose a sentence of twelve months’ imprisonment in relation to Charge 4. I would impose a sentence of six months’ imprisonment in relation to Charge 37. I see no reason to interfere with the terms of imprisonment in relation to the other charges. I would make an order with respect to all charges other than Charge 4 that each sentence be served concurrently with each other sentence, including that imposed in relation to Charge 4. I would require the appellant to serve four months’ imprisonment and I would suspend from execution the remaining period of the sentence.
142 I would not disturb the costs order made in the Court below. I would not make any order as to the costs of the appeal particularly as the appellant has succeeded, in part at least, by reference to an argument which was not put in the Court below.
I certify that the preceding seventy-six (76) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko. |
Associate:
Dated: 15 February 2011
Appendix: List of Cases
Re Norman Leslie Gallagher v The Honourable Peter Durack (1982) 68 FLR 210
Robert James Macleod v Australian Securities Commission [1993] FCA 553
Australian Securities Commission v Macleod (No 3) (1993) 40 FCR 475
Albert Langer v Australian Electoral Commission (1996) 59 FCR 463
Australian Securities Commission v Errol John White [1998] FCA 850
Australian Competition and Consumer Commission v Goldstar Corp Pty Ltd [1998] FCA 1441
Australian Competition and Consumer Commission v Goldstar Corp Pty Ltd [1999] FCA 585
Australian Securities & Investments Commission v Matthews [1999] FCA 803; (1999) 32 ACSR 404
Australian Competition and Consumer Commission v Hughes [2001] FCA 38; [2001] ATPR 41-807
Australian Securities & Investments Commission v Reid [2002] FCA 84
Australian Securities & Investments Commission v Eagle Inter-Link Pty Ltd [2002] FCA 1524
Australian Competition and Consumer Commission v Purple Harmony Plates Pty Ltd (No 3) [2002] FCA 1487; 196 ALR 576
Australian Competition and Consumer Commission v Purple Harmony Plates Pty Ltd (No 4) [2003] FCA 49
Australian Competition and Consumer Commission v World Netsafe Pty Ltd [2003] FCA 1501; 133 FCR 279
Rip Curl International Pty Ltd v Phone Lab Pty Ltd [2004] FCA 1215; (2004) 63 IPR 496
Buchanan Turf Supplies Pty Ltd v Premier Turf Supplies Pty Ltd [2004] FCA 1694
Australian Prudential Regulation Authority v Siminton (No 3) (2006) 230 ALR 528; [2006] FCA 397
Siminton v APRA (2006) 152 FCR 129; [2006] FCAFC 118
Australian Securities & Investments Commission v Reid (No 2) [2006] FCA 700
Pattinson (Trustee), In the matter of Bell (Bankrupt) v Bell [2007] FCA 137
Bauer v Power Pacific International Media Pty Ltd [2007] FCA 349
Universal City Studios LLLP v Hoey t/as DVD Kingdom [2007] FCA 806; 73 IPR 45
Australian Prudential Regulation Authority v Siminton (No 10) [2007] FCA 1814
Siminton v Australian Prudential Regulation Authority [2008] FCAFC 90
Australian Prudential Regulation Authority v Siminton (No 11) [2007] FCA 1815
Ambrose (Trustee), In the matter of Peter Athanasas (Bankrupt) (No 2) [2008] FCA 1016
Australian Competition & Consumer Commission v Levi (No 3) [2008] FCA 1586; [2008] ATPR 42-257
Jones v Toben (No 2) [2009] FCA 477
IN THE FEDERAL COURT OF AUSTRALIA | |
VICTORIA DISTRICT REGISTRY | |
GENERAL DIVISION | VID 858 of 2010 |
ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA |
BETWEEN: | JOSEF VAYSMAN Appellant
|
AND: | DECKERS OUTDOOR CORPORATION INC. Respondent
|
JUDGES: | GRAY, BESANKO AND BROMBERG JJ |
DATE: | 16 FEBRUARY 2011 |
PLACE: | MELBOURNE |
REASONS FOR JUDGMENT
BROMBERG J
143 For the reasons expressed by Gray and Besanko JJ I agree that the appellant’s application for an extension of time within which to file and serve a notice of appeal should be granted. I would also give leave to the appellant to rely on his amended notice of appeal filed on 1 November 2010.
144 For the reasons that follow, I would allow the appeal and set aside orders 3, 4 and 5 of the orders made by the primary judge on 15 September 2010. I would substitute for those orders the orders I have proposed at [54] and [56] below. These reasons for judgment also serve to explain why I joined in the order made by the Court at the conclusion of the hearing of the appeal that the appellant be released from custody.
the facts and the reasons of the primary judge
145 The nature and history of the proceeding, the relevant facts (including the allegations made against the appellant in the statements of charge) and a summary of the primary judge’s reasons are set out in the reasons for judgment of each of Gray J and Besanko J. To the extent that I need to refer to any further facts or to emphasise aspects of the primary judge’s reasons not already dealt with, I will do so.
parity
146 The first ground of appeal raised by the appellant’s amended notice of appeal is that the primary judge erred in his application of the sentencing principle of parity. For the reasons set out by Besanko J, I would allow the appellant to raise parity in relation to the sentence imposed on Vladimir Vaysman and the sentence imposed on Leonid Mykhalovskyi, despite those arguments not having been raised in the Court below.
147 The appellant’s argument relates to charge 37, in respect of which the primary judge imposed a sentence of nine months’ imprisonment on the appellant. In Deckers Outdoor Corporation Inc v Farley (No 8) [2010] FCA 657 the primary judge imposed a sentence of six months’ imprisonment in relation to charge 32 against Vladimir Vaysman. For the reasons explained by Besanko J, the comparison sought to be made between the sentence of nine months imposed on the appellant and the sentence of six months imposed on Vladimir Vaysman is relevant. In my view, in imposing the sentence on the appellant which was imposed in relation to charge 37, the primary judge should have had regard to the sentence imposed on Vladimir Vaysman in relation to charge 32. A proper consideration of parity required that the sentence imposed on the appellant in relation to charge 37 be no greater than the sentence imposed on Vladimir Vaysman in relation to charge 32. I have come to that view for the reasons given by Besanko J.
148 The comparison sought to be made with the sentence of three months’ imprisonment imposed on Leonid Mykhalovskyi is, for the reasons explained by Besanko J, not a valid comparison and I find no error in the primary judge’s approach in relation to that comparison.
149 Given that the primary judge erred with respect to the sentence he imposed in relation to charge 37, I agree with Besanko J that there has been an error in the sentencing process and that accordingly the appellant must be re-sentenced.
age and ill health
150 The appellant’s second ground of appeal is that the primary judge erred by failing properly to take into account the age and ill-health of the appellant.
151 The appellant is 74 years of age. The nature of his ill-health was described in the reasons of the primary judge and recounted in the reasons of Besanko J. As that evidence shows, the ailments suffered by the appellant are serious and particularly significant given the appellant’s age. The appellant relied on his age and ill-health together with his lack of English and that he would be separated from his wife of 50 years as factors that would make it more difficult than would ordinarily be the case for the appellant to serve a sentence of imprisonment.
152 The reasons of the primary judge suggest that those factors were not taken into account in determining the sentence of imprisonment, but were only taken into account in relation to whether and to what extent the appellant’s sentence should be suspended. I think, with respect, that the primary judge erred by failing to take into account those mitigating factors in determining the appropriate sentences of imprisonment to be imposed.
153 These mitigating factors were important and should have been taken into account. The evidence relied on by the appellant was sufficient to substantiate the contention that it would be more difficult for him to serve a sentence of imprisonment. For the reasons given by Besanko J, the appellant’s age and ill-health should have been taken into account as factors which would impose a greater burden on the appellant.
154 In my view, the failure of his Honour to take age and ill-health into account in imposing the sentence, and the failure to give those factors sufficient weight, is reflected in what I consider to be the manifestly excessive sentences of imprisonment imposed on the appellant and in particular the 18 month sentence on charge 4. As both Gray J and Besanko J have explained, the respondent put forward a schedule, showing the penalties imposed by this Court in other contempt cases. The list of cases is appended to the reasons for judgment of Besanko J. Accepting that all cases are different and that care must be taken in comparisons of this kind, it seems surprising that in circumstances where a penalty in excess of 12 months has never been imposed, a 74 year old man with significant health problems should be sentenced to imprisonment for 18 months.
155 I shall return to give further consideration to the ground of appeal which contends that each of the sentences was manifestly excessive, but for the purposes of dealing with the question of age and ill-health, the extent of the sentences imposed confirms my view that age and ill-health were not sufficiently taken into account in circumstances where significant weight should have been given to them as mitigating factors.
failing to properly take into account past good character
156 The appellant has no prior convictions. He had come to Australia in difficult circumstances as a refugee and had, by dint of hard work, been able to live a good and productive life. He has raised and provided for his family. These matters were relied upon as supporting the appellant’s previous good character.
157 The appellant contended that the primary judge erred because, in determining whether the appellant was of good character, the primary judge took into account the appellant’s conduct in the course of the litigation before the primary judge. The appellant relied upon and referred to McHugh J’s identification of a two-stage process in relation to good character in Ryan v The Queen (2001) 206 CLR 267 at [36].
In considering a prisoner's good character when sentencing, the court must distinguish two logically distinct stages. First, it must determine whether the prisoner is of otherwise good character. In making this assessment, the sentencing judge must not consider the offences for which the prisoner is being sentenced. Secondly, if a prisoner is of otherwise good character, the sentencing judge must take that fact into account. However, the weight that must be given to the prisoner's otherwise good character will vary according to all of the circumstances of the case.
158 With respect to the primary judge, it seems to me that in determining whether the appellant was of otherwise good character, he did take into account the offences for which the appellant was being sentenced. At [29] of the primary judge’s reasons for judgment (Deckers Outdoors Corporation Inc v Farley (No 9) [2010] FCA 1007), his Honour set out aspects of the appellant’s conduct “in the course of the present litigation” which he thought ought to be “balanced against” the evidence of the appellant’s previous good character. The primary judge concluded that “such conduct clearly undermines his claim to have been of good character”.
159 This conclusion makes clear that the primary judge was addressing the appellant’s claim to have previously been of good character, and impermissibly regarded that claim to have been undermined by his conduct in the litigation. I do not, however, regard the error as significant and would not for that reason alone have set aside the orders made by the primary judge.
Double punishment
160 The fourth ground of appeal argued by the appellant is that the primary judge erred “by doubly punishing the appellant”. It was submitted that that had occurred in relation to charges 36 and 37 and in relation to charges 4 and 5. The reasons of Gray J and Besanko J demonstrate, and I am satisfied, that there is no merit in this ground of appeal.
the fifth ground of appeal
161 The fifth ground of appeal relies on what the primary judge said at [40] of his reasons for judgment:
The gravity of his offending was compounded when, on 5 July 2008, he instructed senior counsel who then appeared on his behalf to advise the Court that he and his wife had “never intended to break the [November 2007] orders and certainly intend to abide by the orders of the Court in the future … They are completely prepared to make further undertakings to abide by Court orders”: see Deckers (No 7) at [11]. Despite these assurances he continued to produce counterfeit products at Christensen Street.
162 What Senior Counsel said on behalf of the appellant is somewhat truncated in the primary judge’s reasons for judgment. What was said is as follows:
We dispute that the evidence relied on by the applicant is sufficient to warrant the orders that are sought, so we would contest that there is enough evidence to indicate there is a breach of the orders by my clients. That’s the first point. But in any event, to short-circuit all matters, I have been instructed to inform the court that my clients have never intended to breach the orders and certainly intend to abide by the orders of the court in the future; that they have suffered under the disadvantage of not fully understanding what the previous orders were. Although they deny there has been a breach, they say they have never really been properly explained to them and they are completely prepared to make further undertakings to abide by court orders.
163 It is apparent from what Counsel said that the appellant was disputing a breach of the orders. That was Counsel’s first point. Counsel’s further comments were made in an attempt “to short-circuit all matters”. It seems to me that Counsel was suggesting that the proceedings not be continued and be resolved on the basis that the appellant (and his wife) give undertakings to abide by the orders sought by the respondent. He was indicating the preparedness of the appellant to give undertakings as to future conduct with a denial of any past breaches. The primary judge characterised what was said as the giving of “assurances”. The breach of such assurances was regarded by the primary judge as compounding the gravity of the appellant’s offending. That observation, together with the attention given to this issue, suggests to me that the primary judge gave this matter significant weight.
164 With respect, I think that the primary judge erred in characterising what was said by Counsel as the giving of assurances. The only relevance of what was said by Counsel is the comment that the November 2007 orders had been explained to the appellant at least on or before 5 June 2008 (not 5 July 2008 as suggested in the primary judge’s reasons). The primary judge would have been entitled to take that matter into account in assessing the gravity of contraventions that occurred thereafter. However, in my view the primary judge erred in placing what I regard to have been significant weight on what he wrongly characterised to be a breach by the appellant of assurances given to the Court. That error is of some significance and helps to explain, at least in part, why the primary judge was motivated to impose the sentences that he did.
manifestly excessive
165 The sixth and final ground of appeal is that “the individual sentences, total effective sentence and period of sentence not held in suspense are manifestly excessive”. Having already arrived at the view that there were errors in the sentencing process and that the appellant must be re-sentenced, it is not strictly necessary for me to deal with this ground of appeal. However I propose to do so, including for the purpose of explaining why, in re-sentencing the appellant, I have taken the view that I have.
166 A manifest error in sentencing arises because the sentence imposed is out of the range of sentences that could have been imposed: Hili v The Queen [2010] HCA 45 at [60]. Manifest error, as Heydon J said in Hili, is made out where the order is unreasonable or plainly unjust. By reference to House v The King (1936) 55 CLR 499, Heydon J explained:
It is not surprising that the leading case in this Court on the power of appellate courts to intervene in discretionary judgments, House v The King, is a sentencing case. Nor is it surprising that in House v The King the Court divided appellable errors in discretionary judgments like sentencing judgments into two categories. The first was stated thus:
"If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so."
The second existed where the order was unreasonable or plainly unjust.
"It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred."
In the second category, appellate intervention takes place because the character of the order indicates that some underlying error within the first category has taken place, even though it is not possible to identify it.
167 Manifest excess, or inadequacy, of sentence maybe revealed by consideration of all of the matters that are relevant to fixing a sentence: Hili at [60]. Bearing in mind all of the relevant factors, there is nevertheless one particular factor which is of paramount significance in explaining why, in my view, each of the sentences of imprisonment imposed upon the appellant were excessive.
168 In Louis Vuitton Malletier SA v Design Elegance Pty Ltd [2006] FCA 83 at [25], Merkel J set out the factors which he accepted were relevant to penalty. The primary judge adopted that analysis, but it is not apparent to me that he applied it, at least in one important respect. Relevantly, Merkel J identified the following in relation to the question of imprisonment:
Imprisonment
1.8 It is widely accepted that the court should only impose a term of imprisonment in the most serious criminal contempt cases: Keeley v Justice Brooking (1979) 143 CLR 162 at 179; Gallagher v Durack (1983) 152 CLR 238.
1.9 In Deputy Commissioner of Taxation v Hickey [1999] FCA 259 [(1999) 42 ATR 229], Carr J held that imprisonment is a "last resort": see also R v Vasin (1985) 39 SASR 45; James (1985) 14 A Crim R 364; Skipper (1992) 64 A Crim R 260.
169 The consideration at 1.9 that imprisonment is a “last resort” has, in the context of contempt proceedings, been restated by a number of judges of this Court including by Sackville J in Australian Securities and Investment Commission v Matthews [1999] FCA 803 at [30].
170 In James (to which Merkel J referred) Burt CJ stated that it is now accepted everywhere that imprisonment is a sentence of last resort: at 364. His Honour referred to the Law Reform Commission’s Interim Report on Sentencing of Federal Offenders and its recommendation that courts should not resort to the use of imprisonment as a punishment unless no other sanction can achieve the objectives contemplated by law. As his Honour observed, that recommendation was accepted and acted upon by Parliament enacting s 17A(1) of the Crimes Act 1914 (Cth) (“the Crimes Act”) which provides:
s 17A(1) A court shall not pass a sentence of imprisonment on any person for a federal offence, or for an offence against the law of an external Territory that is prescribed for the purposes of this section, unless the court, after having considered all other available sentences, is satisfied that no other sentence is appropriate in all the circumstances of the case.
171 Whilst a contempt is not a federal offence for the purposes of s 17A of the Crimes Act (Pattison (Trustee), in the matter of Bell (Bankrupt) v Bell [2007] FCA 137 at [47]), I see no reason why the same approach ought not be taken in relation to the punishment of a contempt. Indeed, that approach is implicit in the notion that imprisonment is a “last resort”.
172 Burt CJ in James referred to the criteria put forward by the Law Reform Commission in its report which lead to the enactment of s 17A(1) of the Crimes Act. The criteria recommended were as follows:
For the purposes of determining whether some sentence other than imprisonment should be imposed on a person convicted of an offence against a law of the Commonwealth, the Court shall have regard to one or more of the following—
(a) whether the person has endangered the life or personal security of others; or
(b) whether the offence is of such a nature that no punishment other than imprisonment would be sufficiently severe, having regard to the harm done;
(c) whether a sentence other than imprisonment would be inadequate having regard to the seriousness of the offence;
(d) whether the person has been convicted, whether in the State or Territory in which he is convicted or not, of an offence similar to that in respect of which he is to be sentenced.
173 Burt CJ adopted those criteria as indicating the correct approach, but emphasised that in the application of the criteria “one must always have regard to the character and physical and mental condition of the person to be sentenced and, indeed, to all things personal to him”: at 366. His Honour emphasised that the appropriate question is not whether the person to be sentenced has committed an offence which is deserving of imprisonment; the question is whether in all of the circumstances no other sentence is appropriate: at 366. The authority of a court will be undermined rather than enhanced if courts are seen to be punishing more severely in relation to contempts of court than for other matters.
174 On that basis and in the context of punishment for contempt, the question is whether by reference to the harm done, the seriousness of the contempt, any prior relevant misconduct and the physical, mental and other personal conditions of the person to be sentenced, no sentence other than imprisonment is (in all the circumstances) appropriate.
175 The extent of the harm done and the seriousness of the contempt are obviously interrelated. Traditionally, sanctions for contempt reflected the purpose or object of the particular kind of contempt in question. The distinction between civil and criminal contempt was explained by Brennan, Deane, Toohey and Gaudron JJ in Witham v Holloway (1995) 183 CLR 525 at 530:
In general terms, the distinction between civil and criminal contempt is that a civil contempt involves disobedience to a court order or breach of an undertaking in civil proceedings, whereas a criminal contempt is committed either when there is a contempt in the face of the court or there is an interference with the course of justice. However, disobedience or breach of an undertaking amounts to a criminal contempt if it involves deliberate defiance or, as it is sometimes said, if it is contumacious.
176 As the majority went on to recognise (at 531), the basis of the distinction “is said to lie in the difference between proceedings which are remedial or coercive in the interests of the private individual and proceedings in the public interest to vindicate judicial authority or maintain the integrity of the judicial process”. However as the majority went on to emphasise (at 533), non-compliance with court orders necessarily constitutes an interference with the administration of justice and thus the public interest of vindicating judicial authority is raised in relation to both civil and criminal contempts. It is for that reason that in a civil contempt a “penal or disciplinary jurisdiction” may also be called into play: Witham at 533.
177 The vindication of judicial authority must necessarily reflect the nature of the challenge to that authority inflicted by the conduct in contempt in question. Not all contempts involve an intention to disobey the order of the court let alone contumacy and public defiance. In terms of degree of gravity there is a broad spectrum. A civil contempt does not require an intention to breach the court’s order and may result from casual, accidental or unintentional disobedience. If, however, the act or omission is wilful, a court will have the capacity to fine or imprison the contemnor. A wilful breach is to be distinguished from the more serious contumacious breach required as a necessary element of establishing a criminal contempt. As McHugh J pointed out in Witham (at 542) by reference to Lord Wilberforce speaking on behalf of the House of Lords in Heatons Transport (St Helens) v Transport and General Workers’ Union [1973] AC 15 at 108-109, wilful breach is not the same as “contumacious or insulting behaviour or interference with the administration of justice”. The seriousness of contumacious conduct will also depend upon whether the disobedience was constituted by private resistance or public defiance.
178 The use of imprisonment (or the threat thereof) in order to coerce compliance with court orders is a necessary tool in dealing with contempt of court and will be justifiably utilised from time to time. Imprisonment, as a disciplinary sanction for contempt, ought to be confined to the most serious of contempts. If, as Merkel J in Louis Vuitton identified, imprisonment should be reserved “for the most serious criminal contempt cases”, it follows that in the absence of serious contumacious disobedience, imprisonment should rarely be imposed as a disciplinary sanction. As Keane CJ, Dowsett and Reeves JJ recently observed in Jones v Australian Competition and Consumer Commission [2010] FCAFC 136 at [36], there would be a serious question of the propriety of a sentence of imprisonment if the charges raised only a case of civil contempt; that is, a case where contumacious conduct was not contended for.
179 There was no allegation of contumacious conduct in the statement of charges made against the appellant. Indeed, there was not even an allegation of wilful disobedience. What the primary judge was dealing with is properly to be characterised as charges of civil contempt: Microsoft Corporation v Marks (No 1) (1996) 69 FCR 117 at 137.
180 The charges laid against the appellant are set out in the reasons for judgment of Gray J. The appellant is alleged either to have failed to comply with the orders for the provision of affidavits, or to have “deliberately and voluntarily” manufactured, distributed or otherwise dealt with the “Enjoined Products”. There is also a charge (charge 12) that the appellant “deliberately and voluntarily” approached within 100 metres of the Moorabbin factory. In Deckers Outdoor Corporation Pty Ltd v Farley (No 6) [2010] FCA 391 the primary judge found that the appellant “deliberately” engaged in the conduct alleged in each of charges 36, 37, 52, 55, 57, 61 and 67. In Deckers Outdoor Corporation Inc. v Farley (No 7) [2010] FCA 560, the primary judge made the same findings in relation to charges 4, 5 and 12 although he wavered in description between “deliberately and voluntarily” and “consciously and voluntarily”.
181 The phrase “deliberately and voluntarily” which was utilised in the charges and which was adopted by the primary judge appears to have been taken from the decision of Gillard J in Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd [2003] VSC 201 at [32]. The primary judge identified the elements necessary to make good a charge of civil contempt by reference to the elements identified by Gillard J in Advan Investments: see Deckers (No 6) at [130] and Deckers (No 7) at [7].
182 In Advan Investments, Gillard J explained what he meant by the phrase “deliberately and voluntarily” at [32]-[51]. His Honour explained that a “deliberate and voluntary” act or omission did not need to be accompanied by an intent to deliberately breach the order of the court: at [51]. A “deliberate and voluntary” act or omission does not require wilfulness and can be constituted by casual, accidental or unintentional conduct: Advan Investments at [43]-[45].
183 Neither the reasons for judgment of the primary judge in Deckers (No 6) nor those in Deckers (No 7) contain a finding that the appellant breached the orders in question with intent to deliberately breach those orders. There is no express finding of wilfulness. There is no finding of contumacy or defiance. The charges laid against the appellant did not call for such findings to be made.
184 The primary judge’s reasons for judgment in sentencing the appellant (Deckers No 9) do not describe the appellant’s conduct as either wilful or contumacious. The primary judge did say of the appellant that he had “since November 2007, consistently chosen to ignore orders made by the Court” and referred to what the primary judge called “his dismissive attitude to compliance with court orders”. I think that by those observations the primary judge was adverting to the presence of wilfulness. But the difficulty I have is that (unlike the position in relation to Vladimir Vaysman where findings of “contumelious disregard” were made: see Deckers (No 8) at [15]) there are no findings made of contumacious conduct on the part of the appellant.
185 When an analysis is made of the findings that the primary judge made on each of the charges, as Gray J has done, it is not obvious that the conduct of the appellant was contumacious. As Gray J has observed in relation to those charges dealing with the failure of the appellant to comply with orders requiring affidavits, the findings appear to have been made on the basis of a failure to do what the appellant ought reasonably to have done, rather than on the formation of an intention not to comply with the Court’s orders: compare Maff Investments Pty Ltd (in Liquidation) v Fuller (1991) 3 WAR 546.
186 Nor is it apparent from the reasons for judgment why the primary judge determined that the appellant’s conduct “warrants nothing less than a sentence of imprisonment”: at [45]. It seems to me that the primary judge was clearly of the view that the appellant’s conduct was deserving of imprisonment, but for the reasons I have already alluded to, the appropriate question is whether in all of the circumstances no other sentence was appropriate. There is no consideration in the primary judge’s reasons as to why punishment by way of substantial fines would not have been appropriate in the circumstances. If the appellant’s impecuniosity was the reason, as Lander J said in Jones v Toben (No 2) [2009] FCA 477 at [83]:
Impecuniosity could not be a reason to imprison a person when the appropriate penalty would otherwise be a fine.
187 In the end, the absence of express findings of contumacious conduct, the doubt I have that the findings actually made as to the appellant’s conduct clearly warrant a finding of contumacy, together with a consideration of the appellant’s age, health and the absence of prior convictions, lead me to the conclusion that the sentences of imprisonment imposed were manifestly excessive.
188 In reaching that conclusion I have also had regard to the schedule of cases put before the primary judge which show the penalties imposed by this Court in other contempt cases. As I have already said, every case is different and regard must be given to the particular circumstances of the case at hand. Nevertheless, when a comparison is made with sentences of imprisonment imposed in other cases, the manifestly excessive nature of the sentences imposed upon the appellant is apparent.
189 Whilst I have had regard to all of the cases in the schedule, particular regard may be had to Jones v Toben (No 2). Dr Toben was found guilty of wilful and contumacious contempt of court on 24 occasions between 7 December 2007 and 25 June 2008. Dr Toben published material in disobedience of orders made by the Court on 17 September 2002 and in breach of undertakings given to the Court on 27 November 2007. The 24 counts of contempt were committed on 13 different occasions over several years. After the hearing of the contempt charges, Dr Toben continued his public defiance of the Court’s authority. Lander J found that Dr Toben’s conduct evinced a calculated intention to disobey orders of the Court and undertakings given to the Court for the purpose of bringing the Court into disrepute: at [73]. Dr Toben continued to disobey the September 2002 orders and breached the November 2007 undertakings throughout the period that contempt proceedings were being organised to be heard between November 2007 and August 2008. He continued to disobey the September 2002 orders and breached the November 2007 undertakings after the hearing of the contempt charges and up until the time of the hearing for costs and penalty. Dr Toben made provocative statements calculated to scandalise the Court in documents published on the day of the hearing for costs and penalty. His public defiance of orders of the Court had continued over a number of years. His conduct in defiance of court orders involved racial offence and thus raised the public interest in a manner that the appellant’s conduct does not. Dr Toben was 64 years of old when sentenced and had a medical condition which affected his legs. Whilst an apology was proffered, it was regarded by the Court as given only for the purpose of influencing the penalty to be imposed. Dr Toben was sentenced to 3 months imprisonment.
re-sentencing
190 I agree with both Gray J and Besanko J that this Court should re-sentence the appellant.
191 Charges 52, 55, 57, 61 and 67 relate to non compliance or lateness in compliance with the filing of affidavits by the appellant and companies of which the appellant was a director. Non-compliance with each of the orders upon which those charges are based would have been excused if the appellant had objected to compliance on the grounds that the information sought would tend to incriminate him or make him liable to civil penalty. The offences specified by Part 14 of the Trades Mark Act 1995 make it apparent that the appellant could have taken that objection. It appears to me that the appellant’s failure had more to do with foolishness than wilfulness. In circumstances where the primary judge did not make a finding of wilfulness and where the findings made do not make it clear that wilfulness was involved, I am not satisfied that the Court has the power to punish these contempts by the imposition of a fine: Australasian Meat Industry Employees’ Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98.
192 Charges 4 and 5 are separate but relate to the same period – March 2008 to 23 January 2009. The first relates essentially to manufacturing Enjoined Products whilst the other relates to selling the goods manufactured. I am satisfied on the basis of the findings that were made by the primary judge that the orders of the Court specified by these charges were knowingly breached. Whilst there is no express finding of wilful conduct, there is sufficient evidence that the appellant’s conduct was not simply casual, accidental or unintentional. The findings made do not sufficiently identify the quantity of goods produced or distributed but I am nevertheless satisfied that the orders were infringed on numerous occasions over a period of at least a number of months. The conduct comprising charges 4 and 5 is serious and particularly so because the appellant continued manufacturing and distributing Enjoined Products after becoming aware that charges involving earlier breaches of orders were pending and where a hearing took place in April and May of 2008.
193 For reasons that I have already explained, I do not consider that no sentence other than imprisonment is appropriate.
194 Charges 36 and 37 relate to the distribution and manufacture of Enjoined Products over a shorter and earlier period from 27 November 2007 to 12 December 2007. Again, on the findings made, the extent of manufacture and sale is not clear. Nevertheless, I am satisfied that the conduct involved was wilful, but I am not satisfied that no sentence other than imprisonment is appropriate.
195 Charge 12 relates to the appellant approaching and entering, (on one occasion) the Moorabbin factory in breach of the 21 January 2009 order. The explanation given by the appellant for entering the premises was held by the primary judge to be unconvincing. I am satisfied on that basis that the conduct was wilful. Again, for reasons I have already explained, I am not satisfied that no sentence other than imprisonment is appropriate.
196 I am of the view that the requirement to vindicate the Court’s authority can be satisfied by the imposition of fines. In respect of charge 4, I would impose a fine of $30,000. In respect of charge 5, I would impose a fine of $20,000. In respect of charge 12, I would impose a fine of $5,000. In respect of charge 36 I would impose a fine of $10,000. I would impose a fine of $15,000 in respect of charge 37. These fines total $80,000. Given that the conduct the subject of these charges was related, I would apply the totality principle and would reduce the total fine to $50,000. As the appellant has already served approximately 50 days in prison, in circumstances where I regard imprisonment as having been inappropriate, I would add an order that the appellant be excused from the payment of the fines I would impose by reason of the term of imprisonment already served.
197 The primary judge was not satisfied that the appellant either acknowledged or accepted that he had contravened orders made by the Court. On the basis of the findings made by the primary judge, it appears to me that at the time the appellant was sentenced, it was both open and would have been appropriate for the Court to have made coercive (as distinct from punitive) orders designed to facilitate future compliance with the orders that were previously breached. For that purpose alone, if I had been sentencing the appellant at that time, I would have made an order that the appellant be sentenced to one month’s imprisonment in relation to charge 4, but that the sentence be wholly suspended for 12 months calculated from 15 September 2010, on the basis that if the appellant thereafter breached any of the orders of Tracey J made on 27 November 2007 binding upon him, the appellant would, if a judge so directed, serve all or such part of the sentence as the judge directed. The Court has power to impose conditional orders of that kind: Hughes v Australian Competition and Consumer Commission [2004] FCAFC 319 at [56] and [58]. However, the sentence of imprisonment already served by the appellant militates against the need for a coercive order of that kind to now be made.
198 I would not disturb the costs order made in the Court below. Despite the fact that the respondent conceded that it should pay costs should the appeal be allowed, I would not make any order as to the costs of the appeal. As a contemnor, the appellant is not well placed to seek relief from this Court for the payment of his own costs.
I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bromberg. |
Associate:
Dated: 15 February 2011
