FEDERAL COURT OF AUSTRALIA

Ali v Collection Point Pty Ltd [2011] FCAFC 87

THE COURT ORDERS THAT:

1.    The appeal be dismissed with costs.

2.    The cross-appeal be dismissed with costs.

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.

REASONS FOR JUDGMENT

1    Before the Court were an appeal and cross-appeal from the judgment of Gordon J given on 29 October 2010 whereby her Honour:

1.    held that the appellant was guilty of contempt by reason of his breach of paragraph 5 of her Honour’s orders made on 22 December 2009 (“December orders”), in that he had failed to destroy a computer disk seized during execution of a penal order made in the proceeding on 2 August 2010 which contained the MYOB data files of the first cross-appellant, ZacXan Pty Ltd (“ZacXan”) and the MYOB data files of T Bulzomi Financial and Legal Services, a business owned by the second cross-appellant.

2.    ordered the appellant to pay a fine of $20,000 on or before 29 November 2010.

3.    ordered the plaintiff to pay ZacXan and T Bulzomi Financial and Legal Services costs of and incidental to the notice of motion dated 15 September 2010 on a party/party basis.

2    By a notice of appeal dated 19 November 2010, the appellant appeals from the findings that he breached the December orders and that the breach was deliberate, and from the imposition of a fine of $20,000.

3    The notice of appeal states the following grounds:

1.    The primary Judge erred in failing to find that, and ought to have found, that:

(a)    the 22 December 2009 Order was unclear, ambiguous and therefore incapable of compliance.

2.    The primary Judge erred in failing to find, and ought to have found that:

(a)    Her Honour could not be satisfied on the evidence or the weight of the evidence beyond reasonable doubt that there had been non compliance with the December 2009 Order; and

(b)    Her Honour could not be satisfied on the evidence or the weight of the evidence, beyond a reasonable doubt, that if there had been non compliance, the non compliance was deliberate rather than casual, accidental or unintentional on the weight of the evidence before the Court.

3.    That the primary Judge erred in imposing a penalty of $20,000 in the circumstances, which was:

(a)    excessive; and

(b)    inappropriate in the circumstances.

4    Before us, the appellant abandoned ground 1 of the notice of appeal.

5    By a notice of cross-appeal dated 10 December 2010, the second respondent (ZacXan) and third respondent (Antonio Bulzomi) (collectively, “the cross-appellants”) cross-appealed against the judgment of the primary judge on the following grounds:

1.    The penalty imposed on the Plaintiff (Appellant) was manifestly inadequate:

(a)    insofar as it included an order for the payment of the costs of ZacXan Pty Ltd and T Bulzomi Financial and Legal Services on a party and party basis and not on an indemnity or solicitor and client basis, and

(b)    in any event.

2.    Further or alternatively, the learned trial judge erred in the exercise of her discretion in ordering that the Plaintiff (Appellant) pay the costs of ZacXan Pty Ltd and T Bulzomi Financial and Legal Services on a party and party basis and not on an indemnity or solicitor and client basis.

6    The cross-appellants sought orders including:

3.    That the Plaintiff (Appellant) pay the costs of ZacXan Pty Ltd and Antonio Bulzomi of and incidental to the notice of motion dated 15 September 2010 and the costs of the cross-appeal on an indemnity basis, alternatively a solicitor and client basis.

4.    Further, or alternatively to 3, that the Plaintiff (Appellant) be punished for his contempt by a term of imprisonment (whether immediate or suspended) and further, or alternatively, by a fine of not less than $50,000.

7    By a notice of discontinuance of cross-appeal dated 24 March 2011, the cross-appellants discontinued ground 1 of the cross-appeal whereby they sought the appellant’s imprisonment or a higher fine. They maintained the cross-appeal only in relation to seeking their costs of the notice of motion and cross-appeal on an indemnity or solicitor/client basis.

8    The cross-appellants were not originally parties to the proceeding although they filed the notice of motion instituting the contempt proceeding. They were added by the order of Gray J made on 1 February 2011, who also ordered that the notice of cross-appeal be treated as having been validly filed.

9    The primary judge published reasons on 18 October 2010 (“principal reasons”) in relation to the notice of motion and statement of charge of contempt. On 29 October 2010, her Honour heard submissions on penalty and costs and made orders in the proceeding and published reasons on the same day in relation to penalty and costs (“penalty and costs reasons”).

BACKGROUND AND EVIDENCE

10    Prior to 16 October 2009, the appellant had been employed by or “maintained an interest” in Collection Point, a company controlled by its sole director, Domenico Crupi. On 16 October 2009, the appellant ceased his employment with Collection Point. On 19 October 2009, he incorporated a company, Search Point Pty Ltd, of which he was the sole director and shareholder. On the same day, when questioned by Mr Bulzomi, who was then a consultant with Collection Point, the appellant denied that he had retained any of Collection Point’s equipment and denied that he had ever copied Collection Point’s database.

11    The appellant (as he subsequently acknowledged in his affidavit affirmed on 16 August 2010 in the contempt proceedings), had, in fact, at an earlier stage (in July 2009) copied the Premier 12 MYOB Program folder from the Collection Point server onto a CD as a back up, which he then took home. In the contempt proceedings, he asserted that subsequently he had forgotten about this CD and that he believed his brother had removed it to his own bedroom.

12    On 23 November 2009, Collection Point applied for delivery up of confidential information in the appellant’s possession. The appellant, by his affidavit, admitted that on 10 October 2009, contrary to his initial denial, he had copied Collection Point’s MYOB data.

13    In his affidavit affirmed on 22 December 2009, the appellant acknowledged that on 10 October 2009, he had copied Collection Point’s File Maker Pro File. Further, as the following exchange at the hearing on 22 December 2009 between the appellant’s counsel and Mr Holdenson SC (then counsel for the defendant, Collection Point) reveals, the appellant’s counsel conceded on the appellant’s instructions that the appellant had also copied the cross-appellants’ ZacXan and T. Bulzomi Financial and Legal Services MYOB files (“the ZacXan and Bulzomi files”) on 10 October 2009:

Mr Holdenson: Does [the appellant] have or does he not have… namely, the MYOB records for entities other than the defendant? …Then there’s two items within that paragraph 20(a) of our outline, the ZacXan Pty Ltd MYOB records and T Bulzomi Financial and Legal Services MYOB records…

Mr Twigg: I’m prepared to make the concessions that he has got those documents in his possession.

…

Mr Holdenson: Well I don’t need to ask him any questions. My friend has indicated he is about to make a concession in respect of 20(a).

Mr Twigg: I do concede…

14    On 22 December 2009, her Honour made, inter alia, the December orders, which were relevantly as follows:

4.    By no later than 4:00pm 24 December 2009, the plaintiff provide to the Court (and the independent person once they are appointed), and otherwise destroy and confirm on oath:

(a)    the File Maker Pro program and data files of the defendant; and

(b)    the MYOB data files of the defendant.

5.    By no later than 4:00pm 24 December 2009, the plaintiff provide to the Court and the independent person (once they are appointed), and otherwise destroy and confirm on oath:

(a)    the MYOB data files of Zacxan Pty Ltd; and

(b)    the MYOB data files of T Bulzomi Financial and Legal Services.

6.    By no later than 4:00pm 24 December 2009, the defendant provide to the Court a copy of:

(a)    the File Maker Pro program and data files of the defendant;

(b)    the MYOB data files of the defendant;

(c)    the MYOB data files of Zacxan Pty Ltd; and

(d)    the MYOB data files of T Bulzomi Financial and Legal Services.

15    The appellant, inter alia, delivered files to the court and by his affidavit affirmed on 24 December 2009, deposed to his compliance with the December orders as follows:

2.    I make this affidavit pursuant to the orders of the court made this date and in particular orders numbered 4 and 5 thereof.

3.    I hereby declare and affirm that I will have provided to the court by 4pm this day copies of each of the following documents that I copied form (sic) the defendant’s computer server on 10 October 2009, namely:

a.    the File Maker Pro program and data files of the defendant;

b.    the MYOB data files of the defendant;

c.    the MYOB data files of Zacxan Pty Ltd; and

d.    the MYOB data files of T Bulzomi Financial and Legal Services.

4.    I hereby declare and affirm that I have otherwise destroyed all of the data files referred to in paragraph 3 thereof.

16    On 15 February 2010, the appellant recovered a jump drive that he had delivered to the court pursuant to the December orders.

17    On 31 March 2010, the cross-appellants filed a notice of motion seeking to recover from the appellant the files and any copies provided to the independent person. The appellant, by his affidavit affirmed on 14 April 2010, stated that:

Since complying with the Orders of the Court made 22 December 2009 as I deposed in that Affidavit, I have not had access [to] or held or generated any of the data files referred to in paragraphs 1 to 4 of the Notice of Motion [returnable before the Court on 15 April 2010].

18    The proceeding progressed, and, during an interval while attending court for a directions hearing on 21 July 2010, the appellant met Mr Crupi who, by his affidavit sworn on 2 August 2010, deposed to their conversation as follows:

During a short period when the matter was stood down [in the Federal Court], I had a private meeting with Mr Ali at his request. During the meeting, there was a discussion about the winding up of Collection Point. In our discussion, I said words to the effect to Mr Ali that if Collection Point was wound up there would be no money left for anyone, including himself. In response, Mr Ali said words to the effect that he did not care if Collection Point was wound up. I asked him why he didn’t care. Mr Ali said words to the effect that as Collection Point is the biggest money retrieval business, not having it around as a competitor would be better for him. Mr Ali then said that he still had the data files and he said “no fucking way would I get rid of that shit. That’s gold to start up business.” …

Later that evening, at approximately 10.00 pm, Mr Ali contacted me on my mobile phone. Mr Ali repeated that he was going to have Collection Point wound up because he said that he “didn’t need a competitor that big”. Mr Ali also admitted, once again, … that he still had all of Collection Point’s data files. Mr Ali said words to the effect that he had everything he needed to start business again.

19    On 1 August 2010, Collection Point applied ex parte for a search order against the appellant and his company, Search Point Pty Ltd.

20    On 2 August 2010, Mr Babington, a debt collection manager employed by Collection Point, had (as he deposed by affidavit sworn on 1 September 2010) a conversation with the appellant as follows:

On 2 August 2010 I was walking to the post office with another Collection Point employee and saw [Mr Ali] in an alleyway. [Mr Ali] started “mouthing off” at me and said words to the effect that “Tony, Collection Point and I were all “fucked”.” He informed me that he still had Tony’s files and that the court could not make him give the files up … He then told me that he would still “get” Tony with the data he had and that he would spread the information everywhere to “anyone who would listen” including all over the internet and would also provide it to the Australian Tax Office. He also referred to the recent court orders and said words to the effect that “even though Tony had won in relation to the return of his files, the Court was not going to make him (Ali) give anything back”.

21    Mr Babington deposed that he was accompanied by another employee, when he encountered the appellant on 2 August 2010. In cross-examination on 11 October 2010, Mr Babington stated that the conversation on 2 August 2010 started when he and the appellant were “maybe 10 feet away” and “then we got up close to each other” and “it started more with a young girl I was with first, he said something to her and that’s where it sort of started from there…”

22    Mr Babington testified that the young girl was an employee at Collection Point called ‘Ashley’, whose last name he did not know, and who still worked at Collection Point. Mr Babington recounted what was said during the conversation. He testified that he had returned to work and informed Messrs Crupi and Bulzomi of the conversation.

23    On 2 August 2010 a penal notice issued by the Federal Court authorised, inter alia, search and entry of the appellant’s business and residential premises, including any vehicle or vehicles under his control on or about those premises.

24    On 3 August 2010, the penal search was conducted and a CD containing, inter alia, the files identified as ZacXan and Bulzomi data files was located in the bedroom of the appellant’s brother.

25    On 16 August 2010, the appellant affirmed an affidavit in which he explained that he had copied the files onto the CD from Collection Point’s server late on a Saturday night in early 2009, and further deposed:

33.    When I made the backup of the MYOB program, I did not check the contents of the Premier 12 folder and I was completely unaware that this folder contained the data of Bulzomi and Zacxan.

34.    Following the making of the various orders by the court in December 2009 and subsequently in April 2010, I searched all of my computers and possessions and destroyed the data materials that I have deposed to as having destroyed. However, I was unaware that the CD that was located in my brother’s room or that the CD still existed or that it contained any data otherwise I would have destroyed that CD as well.

35.    I was present on 3 August 2010 when they were checking the computers and disks. This CD was the last disk that was checked by the Independent Computer Experts. Mr Caldwell told the independent solicitor and Mr Scott that there was information of T Bulzomi and Zacxan on the CD. This was a surprise to me as I had no recollection of this CD or it’s (sic) contents. I did not copy this information onto the CD in October 2009. From the index to the CD, it appears this information relating to T Bulzomi and Zacxan was burnt onto the disk on 18 July 2009.

36.    It is only from this information that I have been able to refresh my memory about the circumstances in which this CD was created and that this is not the information that I gave to the court and the expert, which was information that I had copied from the Collection Point server in October 2009. If I had known this information still existed I would have destroyed it in accordance with the court’s orders.

26    By an affidavit sworn on 1 September 2010, and in his vive voce evidence on 11 October 2010, Mr Crupi further gave evidence of his conversation with the appellant on 21 July 2010, as follows:

Mr Ali told me that when we went in there — the whole story was, when we went in there Mr Ali started telling me that, you know, I should get away from Tony Bulzomi, because he was bad, he had done all these bad things, he was ripping off the company and I basically said, “Look, we’re here to settle this matter.” And he said, “Look, if you come with me — come to my office this afternoon I’ll show you what I’ve still got. I’ve still got all his files. I’ve got everything of Tony Bulzomi’s.” And I said, “What do you mean? You were supposed to destroy all that information?” He said, “No, nobody’s going to tell me to destroy it. I’ve still got everything and I can show you. He’s ripping you off and with what I’ve got I’ll be able to bury him with the State Revenue Office, some ongoing case that he’s got on.” And I kept saying, “You shouldn’t have any of this information.” He says, “Nobody’s going to tell me to get rid of any of that information. I’ve got everything that I took.” What he told me is the original disc that he took, he said to me, “I’ve still got the original, okay. I made copies for the court and that’s what I handed back.” I was dumbfounded. I said, “So you still must have Collection Point’s too?” “I’ve got everything,” he said …

27    On 15 September 2010, the cross-appellants (who were not, at that stage, parties to the proceeding) filed a notice of motion and statement of charge alleging that the appellant had breached the December orders.

28    Pursuant to leave granted on 11 October 2010, the cross-appellants filed a further amended statement of charge, which relevantly stated:

2.    In breach of the December 2009 Order, … [Mr] Ali deliberately and intentionally failed to destroy a computer disk seized during the execution of a Penal order made in these proceedings on 2 August 2010, a screen dump of which is exhibit “AH-3” to [Mr Ali’s] affidavit affirmed 16 August 2010 and which contained the (sic):

(a)    the MYOB data files of ZacXan Pty Ltd; and

(b)    the MYOB data files of T Bulzomi Financial and Legal Services;

referred to in the December 2009 order.

Particulars

Antonio Bulzomi and ZacXan Pty Ltd refer to:

(a)    the affidavit of Dominico (sic) Giovanni Crupi sworn 16 August 2010 in these proceedings;

(b)    the affidavit of Antonio Bulzomi sworn 16 August 2010 in these proceedings;

(c)    the affidavit of Dominico (sic) Giovanni Crupi sworn 1 September 2010 in these proceedings;

(d)    the affidavit of Scott Babington sworn 1 September 2010 in these proceedings;

(e)    the fifth affidavit of [Mr Ali] affirmed 24 December 2009;

(f)    paragraph 5 of the sixth affidavit of [Mr Ali] affirmed 14 April 2010;

(g)    paragraphs 35 and 36 of the seventh affidavit of [Mr Ali] affirmed 16 August 2010 and exhibit “AH-3” to that affidavit.

Further, … [Mr] Ali deliberately and voluntarily threatened to use a computer disk seized during the execution of a Penal order made in these proceedings on 2 August 2010, a screen dump of which is exhibit “AH-3” to [Mr Ali’s] affidavit affirmed 16 August 2010 and which contained:

(a)    the MYOB data files of ZacXan Pty Ltd; and

(b)    the MYOB data files of T Bulzomi Financial and Legal Services;

referred to in the December 2009 order (the “files”) against Antonio Bulzomi as part of the general threats made against him to Messrs Crupi and Babington, namely that he intended to use the files to “help the State Revenue Office put Tony away” and he would spread the information in the files to “anyone who would listen” including all over the internet and to the Australian Taxation Office.

Particulars

Antonio Bulzomi and ZacXan Pty Ltd refer to:

(a)    the affidavit of Dominico (sic) Giovanni Crupi sworn 1 September 2010 in these proceedings; and

(b)    the affidavit of Scott Babington sworn 1 September 2010 in these proceedings.

29    At the hearing of the charge on 11 October 2010, the appellant conceded in cross-examination that:

(a)    in his affidavit of November 2009, he referred to making a copy of the “business” (that is, Collection Point’s) MYOB computer files, and on 22 December 2009, his barrister had made a concession on his instructions that (although they were not mentioned in his affidavit) the appellant had the ZacXan and Bulzomi files in his possession; and

(b)    his barrister’s concession on 22 December 2009 “was the first time that [the appellant] admitted that he had the ZacXan and T Bulzomi files in his possession”.

30    Notwithstanding the above testimony, on 11 October 2010 the appellant also maintained that he downloaded the MYOB program files on the CD on a Saturday night in early 2009 completely unaware that the folder (Premium 12) contained data of T Bulzomi Financial and Legal Services and ZacXan, and “only found out I had those files on 3 August [2010] at 9.30am”.

The judgment below

The principal reasons

31    In the principal reasons, the primary judge set out the legal principles relevant to contempt at [9] to [13]. Her Honour recited the background facts at [15] to [25] and observed (at [24] to [26]):

During the search of Mr Ali’s residential premises, a CD bearing no handwritten annotation, but containing a number of files, was located in a box of other computer disks in the bedroom of Mr Ali’s brother. Two of the files on the CD were MYOB files of ZacXan Pty Ltd and T Bulzomi Financial and Legal Services together with two enabling files required to run the two MYOB files (the CD).

At the hearing of the Notice of Motion for his punishment for contempt, Mr Ali admitted the following facts:

…

3. the CD found at his residential premises did contain MYOB files of ZacXan Pty Ltd and T Bulzomi Financial and Legal Services together with two enabling files required to run the two MYOB files; and

4. he had copied the information on to the CD from the defendant’s server one Saturday night in early 2009.

Mr Ali’s evidence was that (1) he did not know when the CD was last in his possession, (2) he did not recall seeing the CD when he destroyed the other materials in December 2009 or in April 2010 when the issue was again raised and (3) it had completely slipped his mind that the CD existed and had information on it from the defendant’s computers…

32    Her Honour set out paras 33 to 36 of the appellant’s affidavit affirmed on 16 August 2010.

33    Her Honour dismissed the appellant’s contention that she could not be satisfied beyond reasonable doubt of his breach of the December orders, stating at [45]:

The first issue raised by Mr Ali — that I could not be satisfied beyond reasonable doubt that there had been non compliance with the December 2009 Order — was based on the contention that the CD seized during the execution of the search order was not before the court. The issue arose because in response to a notice to produce directed to the defendant’s solicitors to produce the CD seized during the execution of the search order, the solicitors produced a CD bearing the words “Ferrier Hodgson”. On no view was that the CD seized during execution of the search order. In the end, I do not accept that the failure of the Bulzomi Interests to tender the CD seized during execution of the search order is fatal. The reason for that conclusion is simple. Exhibited to the affidavit sworn on 16 August 2010 by Mr Ali was a copy of the index to the CD seized during the execution of the search order. That exhibit lists the following files as being part of the files contained on the CD:

The contents of these files are irrelevant. As Mr Ali stated in two affidavits, if he had been aware of that data on the CD, he “would have destroyed that CD as well” in accordance with the December 2009 Order. That admission is not surprising — that was what the December 2009 Order required him to do.

34    Her Honour also dismissed the appellant’s argument that she could not be satisfied beyond reasonable doubt that the breach was deliberate, stating at [47]:

On this issue, the critical evidence was the evidence of Mr Crupi and Mr Babington. Each gave evidence of statements allegedly made by Mr Ali which, if made, demonstrated beyond reasonable doubt that his retention of the relevant files was a deliberate act rather than a casual, accidental or unintentional act. The evidence of each of Mr Crupi and Mr Babington was, as I have earlier noted, subject to some challenge. But in neither case did the challenges that were made detract from the otherwise clear, direct and honest manner in which the witness gave his evidence. I recognise, of course, that Mr Ali denied, in his testimony in this application, that he made the statements. I recognise that he denied in his testimony that he deliberately disobeyed the court’s order. In the end, however, despite Mr Ali’s denials, I accept the evidence of Mr Crupi and Mr Babington that Mr Ali made statements to the effect that he had retained the files about the Bulzomi Interests that the December 2009 Order had obliged him to deliver up and otherwise destroy. The information to which Mr Ali was referring in these conversations either was, or at least included, the files that were contained on the CD that was found at his residential premises. I am satisfied, beyond reasonable doubt, that Mr Ali’s retention of the CD was a deliberate breach, and therefore wilful disobedience, of the court’s December 2009 Order. Mr Ali’s conduct was not casual, accidental or unintentional…

The penalty and costs reasons

35    In the penalty and costs reasons, her Honour referred to the principles governing the imposition of penalties and to the appellant’s affidavit which set out, inter alia, mitigating circumstances and financial information.

36    Her Honour noted at [5]:

It is not alleged or demonstrated that Mr Ali has any prior conviction for contempt. Mr Ali has shown no contrition. He has not apologised. His additional affidavit evidence does not address the fact that he had the disk.

37    Her Honour concluded that the appellant should pay more than the costs of the proceeding and a merely nominal penalty, principally because it was necessary to achieve specific and general deterrence of the serious offence of disobeying an order that information be delivered up, and because the appellant had bragged that he retained the information and would use it to destroy his opponent.

38    Her Honour recognised that the decision to award indemnity costs was discretionary, referred to Construction Forestry Mining and Energy Union v BHP Steel (AIS) Pty Ltd (2003) 196 ALR 350 (“CFMEU”) and noted the “link between the award for costs and the penalty for contempt”.

39    Her Honour determined not to award indemnity costs, and then fixed the penalty as a “substantial” fine of $20,000.

THE APPEAL

Ground 2

2.    The primary Judge erred in failing to find, and ought to have found that:

(a)    Her Honour could not be satisfied on the evidence or the weight of the evidence beyond reasonable doubt that there had been non compliance with the December 2009 Order; and

(b)    Her Honour could not be satisfied on the evidence or the weight of the evidence, beyond a reasonable doubt, that if there had been non compliance, the non compliance was deliberate rather than casual, accidental or unintentional on the weight of the evidence for the Court.

40    As stated by the plurality in Hearne v Street (2008) 235 CLR 125 at 168 [132], although not all proceedings for contempt are criminal in nature, all charges must be proved beyond reasonable doubt.

41    The party bringing the charge bears the onus of proof, and all contempts, whether or not classified as criminal, must be proved according to the ordinary criminal standard of proof beyond reasonable doubt. Therefore, as Gibbs, Stephen and Mason JJ in their joint judgment in Barca v R (1975) 133 CLR 82 (at 104) stated:

When the case against an accused person rests substantially upon circumstantial evidence the jury cannot return a verdict of guilty unless the circumstances are “such as to be inconsistent with any reasonable hypothesis other than the guilt of the accused”: Peacock v The King. To enable a jury to be satisfied beyond reasonable doubt of the guilt of the accused it is necessary not only that his guilt should be a rational inference but that it should be “the only rational inference that the circumstances would enable them to draw”: Plomp v The Queen; see also Thomas v The Queen.

(Footnotes omitted.)

Ground 2(a)

42    The appellant submitted that in the present case, her Honour erred in finding that it was established beyond reasonable doubt that the December orders were breached, because the CD said to contain the ZacXan and Bulzomi files seized during the penal search was not tendered, and the evidence on which her Honour relied was too vague to constitute a clear admission that any files on the CD corresponded to the ZacXan and Bulzomi files specified in the December orders.

43    The appellant submitted, in that context, that in paragraph [45] of the principal reasons, her Honour misconstrued the appellant’s statements in his affidavits as an admission that the CD seized during the penal search contained the ZacXan and Bulzomi files. The appellant submitted that his affidavit of 16 August 2010 (to which a “screen dump” listing files including the ZacXan and Bulzomi files was exhibited) when read as a whole, did not contain an admission that the files on the CD discovered during the penal search corresponded to those subject to the December orders.

44    Rather, in the appellant’s submission, another reasonable inference open on the evidence was that the CD contained files which, although taken from the Collection Point server, were not the ZacXan and Bulzomi files, and any admissions to the contrary were mistaken. Further, the appellant’s concession that he would have destroyed the CD had he known of it, far from being an unequivocal acknowledgement that it contained files referred to in the December orders, simply recorded the precautionary measures he would have taken as a matter of prudence, given the scope of the December orders.

45    We reject the submission that the evidence before her Honour was not sufficient to exclude reasonable doubt that the appellant breached the December orders or that the CD taken during the penal search contained the ZacXan and Bulzomi files. The appellant’s strained construction of his sworn statement that when he made the back-up of the MYOB program, he was unaware that the folder contained the Bulzomi and ZacXan files, requires it to be read as an assertion that he was still, at the time of swearing the affidavit, unaware that the back-up program on the CD contained the respondents’ files; it also requires his assertion that, had he known that the CD still existed or contained any data, he would have destroyed it, to be read as an assertion that he was still ignorant of whether it contained files in breach of the December orders, but would have destroyed the CD out of an abundance of caution, without knowing whether or not it contained any material in breach of the December orders. Alternatively, the appellant invites the court to conclude that his statements were or may have been based on a mistake.

46    Although the appellant did not state in his affidavit whether he had at any stage personally examined the contents of the CD, his admission that the CD contained the relevant files was nonetheless, on any fair reading, unequivocal. Nor is there any basis for inferring that it was mistaken.

47    Moreover, even if, contrary to the above conclusion, the appellant’s affidavits read in isolation left room for reasonable doubt, her Honour clearly recognised and took into account other relevant circumstances and evidence which, in combination, constituted an undeniably sufficient basis for her finding, according to the requisite standard, that the appellant breached the December orders.

48    In particular, her Honour referred at a number of points in the principal reasons to the evidence of Mr Babington and to Mr Crupi’s evidence that the appellant asserted that “he still had all his files – I’ve got everything of Tony Bulzomi”, which, at [47], her Honour accepted in relation to her findings both of the breach and its deliberate nature.

49    The evidence of Messrs Crupi and Babington (which, as discussed below, her Honour was entitled to prefer) was an important element of the totality of the evidence relevant to breach of the December orders.

50    If either the appellant’s statements in his affidavits or those to which Messrs Crupi and Babington testified failed clearly to identify the files there mentioned as ZacXan and Bulzomi files specified in the December orders, her Honour was, in a circumstantial case, entitled to put together a number of elements of the evidence, none of which was, in itself, sufficiently strong to support the inference of breach beyond reasonable doubt.

51    In R v Hillier (2007) 228 CLR 618 at 638-639 [48]-[49], the plurality stated:

Often enough, in a circumstantial case, there will be evidence of matters which, looked at in isolation from other evidence, would yield an inference compatible with the innocence of the accused. But neither at trial, nor on appeal, is a circumstantial case to be considered piecemeal. As Gibbs CJ and Mason J said in Chamberlain…:

“At the end of the trial the jury must consider all the evidence, and in doing so they may find that one piece of evidence resolves their doubts as to another. For example, the jury, considering the evidence of one witness by itself, may doubt whether it is truthful, but other evidence may provide corroboration, and when the jury considers the evidence as a whole they may decide that the witness should be believed. Again, the quality of evidence of identification may be poor, but other evidence may support its correctness; in such a case the jury should not be told to look at the evidence of each witness separately in, so to speak, a hermetically sealed compartment; they should consider the accumulation of the evidence: cf Weeder v The Queen.

Similarly, in a case depending on circumstantial evidence, the jury should not reject one circumstance because, considered alone, no inference of guilt can be drawn from it. It is well established that the jury must consider “the weight which is to be given to the united force of all the circumstances put together”: per Lord Cairns, in Belhaven and Stenton Peerage, cited in R v Van Beelen; and see Thomas v R and cases there cited.”

And as Dixon CJ said in Plomp:

“All the circumstances of the case must be weighed in judging whether there is evidence upon which a jury may reasonably be satisfied beyond reasonable doubt of the commission of the crime charged.

…

In the present case, there was evidence … which was consistent with Mr Hillier’s innocence. But the question for the Court of Appeal was whether, on the whole of the evidence, it was open to the jury to be persuaded beyond reasonable doubt that he was guilty.

(Footnotes omitted.)

52    In our opinion, having examined the whole of the evidence for ourselves her Honour was entitled to be, and indeed correct to have been, satisfied beyond reasonable doubt that the appellant breached the December order by failing to destroy, and retaining in his residence, a CD which contained copies of the ZacXan and Bulzomi files.

53    It follows that ground 2(a) of the appeal is not made out.

Ground 2(b)

54    The appellant submitted that her Honour erred in finding that his breach was deliberate, as she could not have been satisfied of that beyond reasonable doubt, given his evidence that he had forgotten, by the date of the December orders, previously copying files onto the CD stored in his brother’s room, and given the deficiencies in the evidence of Messrs Crupi and Babington preferred by her Honour on that question.

55    The appellant relied, in that context, on the following:

(a)     the curious omission by Mr. Crupi to refer to the critical conversation of 16 July 2010 in his earlier affidavits sworn 2 and 16 August 2010, the former being used in support of the penal order application;

…

(e)    the respondents failed to call the Collection Point employee present at the discussion that took place between the appellant and Mr. Babbington [sic] on 2 August 2010, the absence of whom meant that Her Honour should have found that her evidence would not have assisted the respondents' case, thus further adding to the unreliability of the evidence given about the conversation attributed to the appellant.

56    The appellant submitted that even were her Honour entitled to reject the appellant’s evidence, the contrary evidence of Messrs Crupi and Babington was so glaringly improbable as necessarily to create reasonable doubt in relation to the finding of deliberate breach. The appellant reiterated the criticisms made below of the evidence of Messrs Crupi and Babington, including Mr Crupi’s failure to refer to the appellant’s assertion on 21 July 2010 that he had the ZacXan and Bulzomi files until swearing his affidavit on 1 September 2010, despite having earlier (on 16 August 2010) sworn an affidavit about his conversation with the appellant. Further, the appellant submitted that her Honour mischaracterised Mr Crupi’s evidence as clear, when, to the contrary, it was on any fair reading, confused.

57    We reject those submissions. In the course of her reasons, her Honour noted that Mr Babington was cross-examined as to his possible reconstruction, his reasons for failing to include all the information in his affidavit and the possibility of recent invention. Her Honour observed that Mr Bulzomi (who testified that Mr Babington relayed the conversation to him) corroborated Mr Babington’s evidence. Her Honour observed that the appellant was also cross-examined about the altercation and, while admitting some aspects, denied threatening Mr Bulzomi as alleged and denied that “he knew at the time of his altercation with Mr Babington that he still had copies of the data files (in the form of the CD) the subject of the December 2009 Order” (at [34]).

58    Her Honour observed that Mr Crupi was also challenged about recent invention, his inconsistent recollection of the appellant’s words and his failure to disclose additional aspects of evidence at an earlier time and noted his explanation.

59    Her Honour, as she reiterated at [47] of the principal reasons, was fully cognisant of the various challenges to the testimony of Messrs Babington and Crupi, but stated “in neither case did the challenges that were made detract from the otherwise clear, direct and honest manner in which the witness gave his evidence”. Her Honour’s remark was specifically directed at the demeanour of the witnesses. Her Honour also recognised that the appellant had denied that he made the relevant statements.

60    Having had the considerable advantage of seeing and hearing the testimony of all witnesses, her Honour accepted the evidence of Messrs Crupi and Babington that the appellant had made statements to the effect that he had retained files subject to the December orders and was satisfied beyond reasonable doubt that the retention of the CD was a deliberate breach.

61    We are not persuaded that the statements attributed to the appellant by Messrs Crupi and Babington were too vague to constitute a firm identification of the files he claimed to possess with those specified in the December order.

62    Despite qualifications to the historically almost absolute appellate deference accorded to a primary judge’s factual findings on the basis of witness credibility, the authorities continue to acknowledge the significant advantages of a primary judge, especially in relation to the impression of witnesses’ credibility obtained on hearing and seeing them give evidence.

63    In the present case, there is no basis for inferring that her Honour “failed to use or palpably misused” her advantage, such that her conclusions were “glaringly improbable” or were “contrary to any compelling inference” (Fox v Percy (2003) 214 CLR 118, State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) & Ors (1999) 73 ALJR 306).

64    We were not persuaded that the respondents’ failure to call the employee ‘Ashley’ referred to at [22] above should, either in itself or in combination with other deficiencies in the evidence, have raised reasonable doubt. Mr Babington’s account provided no sufficient basis on which to infer that Ashley overheard his conversation with the appellant. Indeed, Mr Babington was not asked whether the employee was in or out of earshot during the relevant part of what developed into a confrontational and threatening conversation between the two men.

65    Having reviewed the whole of the evidence, we are not satisfied that her Honour erred in accepting as true beyond reasonable doubt Mr Babington’s account of the admissions made by the appellant.

66    In our opinion, ground 2(b) of the appeal is not made out.

Ground 3

67    The appellant conceded that her Honour correctly stated the relevant principles and summarised the appellant’s evidence in mitigation, but contended that she erred in observing that his additional affidavit did not address the fact that he had the disk, as “there was nothing further that he could say with respect to those matters”. Further, the appellant contended that the fine of $20,000 was manifestly excessive.

68    We reject those submissions.

69    Sentencing is recognised to be a product of instinctive synthesis (see, for example, R v Williscroft & Ors [1975] VR 292 at 300 and Wong v The Queen; Leung v The Queen (2001) 207 CLR 584 at 611-612 [74]-[76] per Gaudron, Gummow and Hayne JJ; Markarian v The Queen (2005) 228 CLR 357 at 373-375 [37]-[39] per Gleeson CJ, Gummow, Hayne and Callinan JJ) and a pre-eminently discretionary exercise, appeal from which is governed by the principles of House v R (1936) 55 CLR 499 (“House v The King”) (see also Lukatela v Birch (2008) 223 FLR 1, 164 ACTR 24 at 7 [25]-[26] per Rares J). In House v The King, Dixon, Evatt and McTiernan JJ stated at 504-505:

The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. 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 substation for his if it has the materials for doing so. 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:

70    Her Honour’s impugned observation was made in the context of recording the lack of any apology or contrition and, given that she disbelieved the appellant’s claim that he had forgotten retaining the disk, was eminently explicable. The authorities, such as Australian Competition and Consumer Commission v Allergy Pathway Pty Ltd (No 2) (2011) 192 FCR 34, on which the appellant relied to indicate a lower range of applicable fines, were distinguishable as they involved mistaken, non-contumelious conduct, in contrast to the appellant’s wilful contempt, unmitigated by an apology or contrition, which required a significant penalty to vindicate the authority of the court.

71    In our opinion, no error has been established and her Honour’s discretion did not miscarry.

72    Ground 3 of the appeal is not made out.

73    It follows that, in our opinion, the appeal should be dismissed.

The cross appeal (Indemnity Costs)

74    The cross-appellants submitted that her Honour erred in failing to order that the appellant pay their costs on an indemnity basis, given that they were, at the time, strangers to the action who should not be out of pocket for acting to vindicate the court’s authority.

75    The cross-appellants contended that her Honour failed to have regard to their status as strangers or interveners whose financial interests should be upheld in preference to the public revenue. They submitted that the court should, in such a context, determine costs before fixing a penalty for contempt, but her Honour reversed that process, thereby erring according to the criteria in House v The King.

76    Punishment for contempt serves two functions, first, the enforcement of the process and orders of the Court, the disobedience of which has been described as “civil contempt”, and secondly, the punishment of other acts that impede the administration of justice, described as criminal contempt. All contempts involve an interference with the due administration of justice, either in a particular case or more generally as a continuing process: Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 (“Mudginberri”) at 106 per Gibbs CJ, Mason, Wilson and Deane JJ (with whom Brennan J agreed on this point).

77    In Mudginberri, the High Court emphasised that the underlying rationale of every exercise of the contempt power is that it is necessary to uphold and protect the effective administration of justice (161 CLR at 107). The Court held that there was much to be said for the view that all contempts should be punished as if they are quasi-criminal in character (161 CLR at 109). Lying behind punishment for a contempt involving wilful disobedience to a court order, is the very substantial purpose of disciplining the guilty party and vindicating the authority of the Court (161 CLR at 113).

78    Here, her Honour found that Mr Ali’s retention of the CD was a deliberate breach of the December orders amounting to wilful disobedience of those orders and that it was not casual, nor accidental nor unintentional. That breach called for a substantial penalty. As Gibbs CJ, Mason, Wilson and Deane JJ said in Mudginberri 161 CLR at 115 of the power to fine:

These are considerable powers, resort to which imposes a heavy responsibility upon a court confronted with a determined challenge to its authority. The propriety of their exercise cannot be measured solely by reference to the established procedures attending the prosecution of ordinary breaches of the law. Contempt of court is a distinctive offence attracting remedies which are sui generis: Morris v. Crown Office ([1970] 2 QB 114 at p 129). It is required of the chosen remedy that it be effective, no more but no less. For, if it is not effective, serious and lasting damage to the fabric of the law may result.

79    The award of costs, including indemnity costs, remains a discretionary matter. In CFMEU 196 ALR at 351-352 [3]-[8], Moore J recognised that particular considerations may apply to the discretion to award indemnity costs in contempt proceedings, but stated that indemnity costs are awarded in exceptional cases due to their potentially burdensome nature.

80    As the authorities reveal, indemnity costs are not infrequently awarded where an applicant successfully prosecutes a charge of contempt. In that context, it may be relevant that, as Tracey J stated in Bovis Lend Lease Pty Ltd v Construction Forestry Mining and Energy Union (No 2) [2009] FCA 650 at [45], “the applicant has not been seeking any remedy on its own behalf but rather has been upholding the various public interests which are served by prosecutions for contempt of court”.

81    Nevertheless, as Moore J concluded in CFMEU 196 ALR at 352 [6], there is no “general principle or rule of law” that a successful applicant be “routinely” awarded indemnity costs. His Honour also noted (at [8]):

In a significant number of cases where indemnity costs have been awarded in contempt proceedings, there is a link between the award of indemnity costs and the penalty for contempt. Costs can be explicitly awarded in substitution for or in lieu of a monetary or other penalty.

82    Further, in CFMEU 196 ALR at 360 [53], Tamberlin and Goldberg JJ in their joint judgment identified the underlying principle of contempt proceedings as follows:

We have read the observations of Moore J concerning the appropriateness of taking the costs order into account when fixing a penalty. In the light of the authorities referred to by his Honour, we accept that in exercising the wide discretion given as to the amount of any penalty, the consideration that indemnity costs have been awarded is a relevant matter to take into account. Nevertheless, given the underlying principle that disobedience to court orders must be discouraged, in a case such as the present, simply to impose a minimal penalty on the basis that indemnity costs have been ordered, may be perceived to downplay the significance of the contempt. The contempt here was public, serious and substantial and the penalty should reflect these matters. Taking into account all the circumstances, including the consideration that indemnity costs have been awarded below, we consider the appropriate penalty is $50,000.

83    In Metcash Trading Limited v Bunn (No 6) [2009] FCA 266 at [16], Finn J stated:

As is well accepted, the power to award costs in all proceedings is discretionary. Nonetheless, as is occasionally observed, it is “common or usual practice” to order that the contemnor pay costs on an indemnity basis: see eg Concrete Constructions Pty Ltd v Plumbers and Gasfitters Employees’ Union (No 2) (1987) 15 FCR 64 at 86–87. However, there is no general principle or rule of law in contempt cases to this effect: see Construction, Forestry, Mining and Energy Union v BHP Steel (AIS) Pty Ltd (2003) 196 ALR 350 at [6]; and see generally Dal Pont, Law of Costs (2nd ed, 2009) at [16.65]. As was observed by Moore J in the BHP Steel case at [8] “in a significant number of cases where indemnity costs have been awarded in contempt proceedings, there is a link between the award of indemnity costs and the penalty for contempt. Costs can be explicitly awarded in substitution for or in lieu of a monetary or other penalty”. In the present matter as I have indicated I intend to impose what I regard as being a reasonable and adequate pecuniary penalty. I take that matter into account in my consideration of an appropriate costs order.

84    In the present case, before her Honour, the cross-appellants sought that the appellant be imprisoned. They did not submit that they should receive indemnity costs in priority to the imposition of a penalty. Although not then parties to the proceeding, the cross-appellants stood to benefit from the pursuit of the contempt charges and the enforcement of the December orders. There is no mandatory sequence for the consideration of costs and penalty within the context of the court’s instinctive synthesis. Nevertheless, contrary to the cross-appellants’ submissions, her Honour made no error in her approach to imposing the sentence. She held that a mere order for costs against Mr Ali coupled with the imposition of a nominal penalty was insufficient, and that, accordingly a substantial fine together with an order for party-party costs was appropriate. Her Honour was entitled, in sentencing the appellant, to synthesise all relevant factors including the penalty imposed on, and the costs to be awarded against, the contemnor. There is nothing to suggest that her Honour applied an erroneous principle, considered irrelevant matters, ignored relevant matters or reached a manifestly unreasonable or unjust conclusion.

85    Before us, the cross-appellants also contended that her Honour gave inadequate reasons to support her failure to award indemnity costs. Inadequacy of reasons was not a ground of the cross-appeal. However, in any event, her Honour’s reference to the relevant principles and circumstances sufficiently disclosed her path of reasoning.

86    In our opinion, her Honour’s discretion did not miscarry. The cross-appeal should be dismissed. Each of the appellant and cross-respondents should pay the costs of their failed appeal and cross-appeal respectively.

Associate:

Dated:    15 July 2011