CATCHWORDS

 

CONTEMPT, ATTACHMENT AND SEQUESTRATION - appeal from judgment dismissing application to punish litigant for contempt for breach of consent orders - objection to competency of proceedings - whether appeal as of right under s.24(1) of the Federal Court of Australia Act 1976 - whether proceedings constituted proceedings for criminal or civil contempt - treatment of distinction between civil and criminal contempt in Witham v Holloway (1995) 183 CLR 525 - procedural differences retained - whether proceedings are civil or criminal to be determined by "substance and object" of proceedings - issue to be decided upon institution of proceedings - charges in application of "mixed character" - "wilful and contumacious" breach of orders asserted - moving party continuing to trade - proceedings brought by individual litigant - case to be treated as civil proceedings in the "whole of the circumstances" - objection to competency dismissed

Federal Court of Australia Act 1976, s.24(1)

Federal Court Rules, O.40, Division 2

 

 

Witham v Holloway (1995) 183 CLR 525

 

Australasian Meat Industry Employees' Union v Mudginberri Station Pty. Limited (1986) 161 CLR 98

Thompson v Mastertouch TV Service Pty Ltd (No.3) (1978) 38 FCR 397

Australian Building Construction Employees' and Builders Labourers' Federation v David Syme & Co. Ltd. (1982) 59 FLR 48

Davern v Messel (1984) 155 CLR 21

Hinch v Attorney-General (Victoria) (1987) 164 CLR 15

DPP v Chidiac (1991) 25 NSWLR 372

O'Shea v O'Shea and Parnell; Ex parte Tuohy [1890] 15 P.D. 59

Doyle v Commonwealth of Australia (1985) 156 CLR 510

La Trobe University v Robinson and Pola [1973] VR 682

CONTEMPT, ATTACHMENT AND SEQUESTRATION - which party bears onus of proof - alleged breach of consent orders restraining infringement of copyright under s.36 of the Copyright Act 1968 - in infringement action onus of proving absence of licence lies upon party asserting infringement - whether lack of reference to consent or licence in consent orders reverses onus - several interpretations open - onus upon party alleging contempt - meaning of order ambiguous - dismissal of motion for contempt upheld

                             2.

CONTEMPT, ATTACHMENT AND SEQUESTRATION - standard of proof "beyond reasonable doubt" - alleged breach of consent orders restraining infringement of copyright under s.36 of the Copyright Act 1968 - in infringement action onus of proving absence of licence lies upon party asserting infringement - whether lack of reference to consent or licence in consent orders reverses onus - several interpretations open - onus upon party alleging contempt - doubt as to meaning of order reasonable - dismissal of motion for contempt upheld

Avel Pty Ltd v Multicoin Amusements Pty Ltd (1990) 171 CLR 88

Redwing Limited v Redwing Forest Products Limited [1947] 177 L.T. Rep 387

Australian Consolidated Press Ltd. v Morgan (1965) 112 CLR 483

MICROSOFT CORPORATION & ANOR v RODNEY DAVID MARKS

No. G082 of 1996

BEAUMONT, LINDGREN AND LEHANE JJ.

SYDNEY

14 AUGUST 1996

IN THE FEDERAL COURT OF AUSTRALIA  )

                                  )

NEW SOUTH WALES DISTRICT REGISTRY  )       No. G082 of 1996

                                  )

GENERAL DIVISION                  )

         ON APPEAL FROM A JUDGE OF THE FEDERAL COURT

                        OF AUSTRALIA

                        BETWEEN:  MICROSOFT CORPORATION

                                  First appellant

                                 MICROSOFT PTY LIMITED

    

                                  Second appellant

                           AND:   RODNEY DAVID MARKS

 

                                  Respondent

 

CORAM:    BEAUMONT, LINDGREN AND LEHANE JJ.

PLACE:    SYDNEY

DATE:     14 AUGUST 1996

                      MINUTES OF ORDER

THE COURT ORDERS THAT:

1.   Appeal dismissed.

2.   Costs at first instance to abide the decision of Tamberlin J.

3.   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.

      MICROSOFT CORPORATION & ANOR v RODNEY DAVID MARKS

 

                     (No. G082 of 1996)

                          I N D E X

INTRODUCTION                                              1

     (a)  The principal (infringement) proceedings        1

     (b)  The earlier contempt proceedings                2            

     (c)  The present contempt proceedings                3

THE PROCEEDINGS AT FIRST INSTANCE

     (a)  The statutory context                           3

     (b)  The charges                                     4

     (c)  The case sought to be made by Microsoft in

          support of the charges                          5

     (d)  Mr. Marks' evidence                                  9

THE FINDINGS AND CONCLUSIONS OF THE PRIMARY JUDGE             10

THE CONTENTIONS OF THE PARTIES ON THE APPEAL                  12

CONCLUSIONS ON THE APPEAL                                13

     (a)  The challenge to the competency of the appeal    13

     (b)  The merits of the appeal                            36

          (i)  Order 1(a)                                36

         (ii)  Order 1(b)                                44

     (c)  Costs                                          46

     (d)  Orders proposed                                46

IN THE FEDERAL COURT OF AUSTRALIA  )

                                  )

NEW SOUTH WALES DISTRICT REGISTRY  )       No. G082 of 1996

                                  )

GENERAL DIVISION                  )

         ON APPEAL FROM A JUDGE OF THE FEDERAL COURT

                        OF AUSTRALIA

                        BETWEEN:  MICROSOFT CORPORATION

                                  First appellant

                                 MICROSOFT PTY LIMITED

    

                                  Second appellant

                           AND:   RODNEY DAVID MARKS

 

                                  Respondent

 

CORAM:    BEAUMONT, LINDGREN AND LEHANE JJ.

DATE:     14 AUGUST 1996

                    REASONS FOR JUDGMENT

BEAUMONT J.       

INTRODUCTION

         This appeal, from part of a judgment of Tamberlin J., has the following background.

          The appellants (hereafter collectively "Microsoft") are members of a well-known group of corporations which supply, by wholesale, computer software providing programs for word processing, data storage and spreadsheets.  The respondent, Mr. Marks, carries on the business of the supply, by retail, of computer equipment, both hardware and software.

(a)  The principal (infringement) proceedings

          In 1991, Microsoft and other corporations instituted
proceedings in this Court against, inter alia, Mr. Marks, claiming that the copyright in certain of Microsoft's computer programs had been infringed.  The proceedings were resolved by the making of consent orders on 11 October 1991.  The consent orders, which it appears were drafted by the parties, included the following injunction:

     "1.  The Respondents and each of them by themselves their servants and agents and the servants and agents of each of them be restrained from:

 

          (a)  reproducing or authorising the reproduction of the whole or a substantial part of any of the computer programs identified in Schedule `A' to the Statement of Claim (`the Microsoft Programs');

 

          (b)  selling, offering for sale, supplying, offering to supply or distributing any unauthorised copy of any of the Microsoft Programs;"

 

 

Schedule A to the statement of claim named 36 Microsoft computer programs.

(b)  The earlier contempt proceedings

          In earlier contempt proceedings, which were heard by Gummow J., Microsoft alleged that in November 1991, Mr. Marks had reproduced their programs in breach of the orders.  Counsel then appearing for Mr. Marks did not dispute that the contempts alleged had been committed, so that, as Gummow J. said, in deciding whether, in a case of civil contempt, the Court should impose a fine, it was not a question of "casual accidental and unintentional disobedience" in the sense explained in Australasian Meat Industry Employees' Union v Mudginberri Station Proprietary Limited (1986) 161 CLR 98 ("Mudginberri") (at 109).  On the question of penalty, Gummow J. said that he was satisfied on the evidence before him that Mr. Marks by then, had "a deeper appreciation of the important nature of the orders" than previously.  His Honour ordered that Mr. Marks be fined $2000, and pay costs of $16,000.

(c)  The present contempt proceedings

          In March 1995, Microsoft, alleging that Mr. Marks had again breached the orders, applied to this Court, by notice of motion filed pursuant to O.40 r.5(1), for orders committing Mr. Marks to prison, or otherwise punishing him for contempt.

          Tamberlin J. dismissed Microsoft's application in this and other (presently immaterial) respects.  Microsoft now appeals from this part of his Honour's judgment.

THE PROCEEDINGS AT FIRST INSTANCE

(a)  The statutory context

          By s.31(1) of the Federal Court of Australia Act 1976, it is provided that this Court has the same power to punish contempts of its power and authority as is possessed by the High Court in respect of contempts of that Court.  Section 24 of the Judiciary Act 1903 provides that the High Court shall have the same power to punish contempts of its power and
authority as was possessed at the commencement of that Act by the Supreme Court of Judicature in England.

          Order 40 of the Federal Court Rules provides rules applicable in relation to contempt.  Division 1 applies to contempt in the face or hearing of the Court.  Division 2 applies in cases where the Court has not proceeded under Division 1.

(b)  The charges

          In its statement of charge, filed pursuant to O.40 r.6 (which appears in Division 2 of O.40), after reciting the terms of order 1 made, as has been said, by consent on 11 October 1991, Microsoft alleged relevantly the following:

     "6.  On or about 25 January 1995 the first respondent [Mr. Marks] reproduced the whole or a substantial part of the computer programs MICROSOFT WINDOWS, MICROSOFT WORKS, MICROSOFT EXCEL, MICROSOFT WORD FOR WINDOWS, MICROSOFT ACCESS, MICROSOFT POWERPOINT and MICROSOFT OFFICE.

     7.   On or about 25 January 1995 the first respondent sold and supplied to Frank Douglas unauthorised copies of the computer programs referred to in paragraph 6.

 

     8.   By reason of the matters referred to in paragraphs 6 and 7, the first respondent breached orders 1(a) and 1(b) of the Orders."

 

     ...

 

     24.  Rodney David Marks committed the conduct referred to in paragraphs 1 to 23 above well knowing:

 

          (a)  that the Orders had been granted by this Honourable Court;  and

 

          (b)  the precise terms of the Orders.

 

     25.  Rodney David Marks committed the conduct referred to in paragraphs 1 to 23 above in contumacious disregard of the Orders, and as a deliberate breach thereof."

 

 

As has been said, Tamberlin J. also dealt with other aspects of Microsoft's claims (i.e. paras. 9-23) but those claims are not the subject of this appeal.

(c)  The case sought to be made by Microsoft in support of the charges

          The evidence relied on by Microsoft at the hearing before Tamberlin J. consisted of affidavit evidence from Frank Edward Douglas (to whom Mr. Marks sold the programs) and Robert Edward Hart, both of whom were private inquiry agents retained by Microsoft's solicitors; and from Faye Evelyn Chatillon, a "legal administrator" employed by Microsoft. 

          Microsoft first sought to prove the reproduction by Mr. Marks of its programs in January 1995;  that is to say, a breach of order 1(a).

          In this connection, Microsoft relied principally upon the affidavit of Mr. Douglas sworn 24 March 1995, where Mr. Douglas described the negotiation and conclusion of a sale to him by Mr. Douglas on 25 January 1995 of the software in question in the following circumstances:

     "15.Upon my arrival [at Mr Marks' premises] I saw Mr Marks in discussion with customers. 
Approximately three quarters of an hour later Mr Marks approached me.  He recognised me from my previous visit and I said words to the following effect:

 

              `As indicated on the phone I am in the market for another computer system.  The price on the first system I purchased was very good and I am interested in what packages you have available.'

 

     16.  The conversation continued to the following effect:

 

          Marks:    `We have a couple of deals at the moment but it depends on what you want and what you want to use it for.  What software do you intend to use?'

 

          Douglas:  `It's for business use, in particular accounting.  What software do you have available?

 

          Marks:    `I know you, you're OK, we have dealt with you before.  Don't worry about the programs, we will load what you want if we have it, just don't tell anyone.  Microsoft is being tough these days, particularly on Encarta, and there is a fair bit of counterfeit Encarta about.  The one I have given you though is OK.  Now, you have got most books so you won't need manuals, we will just load the programs.  You have to be careful though, don't tell anyone.'

 

          Douglas:  `I would appreciate getting Office, including Excel as part of Office, as well as Instant Artist and any other worthwhile programs that you have available.'

 

          Marks:    `OK, but the computer will not be available for you to collect until around 2.30 this afternoon, I suggest you come back then.'"

 

Mr. Douglas went on to say:

     "23.I observed Mr Marks loading a CD into the computer during which time he said words to the
effect of:

 

              `This method [using a CD] is much quicker than doing it by disk, this computer has most of the other programs already on it and only needs Office, which is on the CD I am loading.'

 

     24.  I stayed with Mr. Marks as he loaded the CD containing Microsoft Office onto the computer, at which time he then removed the CD, and checked the loading of the programs on the computer.  The computer was then placed into boxes and I paid $2,340 for the computer.  The computer was loaded into my car.  I received an invoice/receipt from Mr Marks, a copy of which is annexed and marked `B'."

 

 

The invoice of 25 January 1995 described what was sold for $2,340 as of "MULTIMEDIA CASE INCLUDING SPEAKERS 8 MEG RAM, 424 MEG HARD DISK ,486DX2-66, INTEL ENCARTA".  It appears, however, that nothing turns on the invoice.

          In his affidavit sworn 6 September 1995, Mr. Marks admitted the supply of the programs to Mr. Douglas, but disputed the latter's version of some, at least, of the surrounding circumstances.

          Microsoft also sought to establish that the programs supplied by Mr. Marks to Mr. Douglas were "unauthorised" copies; that is, a breach of order 1(b). 

          This was said to be indicated by the absence of disks or manuals contained in shrink wrapped packages and of any licence agreement. 

          In this connection, Microsoft relied upon paras.5 and 6 of Ms. Chatillon's affidavit as follows:

     "5.  Microsoft supplies copies of Microsoft Programs in sealed shrink wrapped packages containing floppy disks, on which authorised copies of the relevant Microsoft Programs are stored, and associated user manuals in the form of printed matter.  By `authorised copy' I mean a copy made by or on behalf of Microsoft and imported into Australia with the consent of Microsoft and `unauthorised copy' has a converse meaning.  Computer software resellers are not authorised to copy the Microsoft Programs.  They are not authorised to supply copies of the Microsoft Programs other than in their original shrink wrapped packages or pursuant to a specific licence agreement.  Certain computer manufacturers are authorised to load MS-DOS and MICROSOFT WINDOWS into computers manufactured by them, but manufacturers of unbranded `clone' computers are not authorised to do so.

          (Emphasis added)

 

     6.   Customers of computer retailers from time to time ask computer retailers to load a computer program onto a computer which the customer is buying from the retailer.  If the retailer has supplied to the customer the original package, disks and manuals for the program the retailer may load the program from the original disks onto the hard disk of the computer."

          (Emphasis added)

 

 

In his affidavit, Mr. Hart said:

     "3.  On Friday, 27 January 1995, at the request of Frank Douglas, a director of Nationwide Investigation Services Pty Limited, I took possession of a `clone' 486 computer system with a CD-ROM drive and speakers from Mr Douglas.  I will refer to this computer as the `January Computer'.  Mr Douglas said to me words to the effect of:

 

              'These are all the items supplied by Rod Marks on Wednesday.'

 

          After unpacking the various boxes I then connected the keyboard, mouse and screen to the computer.  I also connected a printer to the computer.  I noted that the computer bore a sticker stating `warranty void if removed' and the number 191094.

 

     4.   After booting up the January Computer I used various commands which instructed the computer to print a full list of the files which were loaded on the hard disk of the computer.

 

     5.   This list disclosed the presence on the hard disk of the January Computer of copies of the following computer programs:

 

              Microsoft Windows for Workgroups

              Microsoft Works

              Microsoft Excel

              Microsoft Word for Windows

              Microsoft Access

              Microsoft PowerPoint

 

     6.   I thoroughly checked the boxes provided to me by Mr Douglas and found no original floppy disks, manuals, shrink-wrapped boxes, licence certificates or licence agreements relating to any of the programs listed in paragraph 5."

 

 

In his affidavit sworn 18 October 1995 in reply to Mr. Marks' affidavit sworn 6 September 1955, Mr. Douglas said:

     "6.  ... at no time was I offered any box containing disks or manuals relating to the computer programs which were loaded on the hard disk of the January computer.  The only original disks handled by Mr Marks when I purchased the January computer were the disks for MICROSOFT EXCEL referred to in paragraph 19 of my previous affidavit and the disk for MICROSOFT OFFICE referred to in paragraph 23 of my previous affidavit.  Those disks were never offered to me, nor were any manuals or licence certificates or warranty cards offered to me."

          (Emphasis added)

 

 

(d)  Mr. Marks' evidence

In his affidavit sworn 6 September 1995, Mr. Marks gave his version of the events described by Mr. Douglas in his affidavit in chief sworn 24 March 1995, including the following:

     "7.  In response to paragraph 16 therein I state that I told the deponent when I was selling the software to him so cheaply that I was selling it at cost in order to keep the sale and cut out the opposition.  I offered that price to him but didn't want people to be aware that I was selling it at cost just to sell the computer."

 

 

THE FINDINGS AND CONCLUSIONS OF THE PRIMARY JUDGE

          Noting the public interest in the exercise of the power to punish for disobedience of court orders in "vindicating the authority of the court and maintaining respect for the law" (see, e.g., Mudginberri at 114), Tamberlin J. said that as a consequence of the recent decision of the High Court in Witham v Holloway (1995) 183 CLR 525 ("Witham"), each element of the conduct said to constitute contempt must be established to the criminal standard, so that the whole case had to be proved beyond reasonable doubt.

          The learned primary Judge considered the evidence dealing with the earlier charges, which are not presently material, but, significantly for our purposes, in the course of this, he expressed reservations about the evidence of both Mr. Marks and Mr. Douglas.  His Honour said:

     "I approach the evidence of Mr Marks with some caution, because under cross-examination his responses were at times inconsistent ... ."

 

 

Later, his Honour spoke of "genuine confusion in [Mr. Marks'] understanding" of another matter.

          Of the evidence of Mr. Douglas, Tamberlin J. concluded, for reasons he then gave:

     "I have substantial reservations as to the accuracy and completeness of the recollection of Mr Douglas in relation to his meetings with Mr Marks."

 

 

In respect of the charges the subject of this appeal, his Honour expressed his conclusions relevantly as follows:

     "These charges relate to the range of Microsoft programs which include Windows, Excel, Word, Powerpoint and Office.

 

     Again, it is alleged that Mr Marks personally reproduced the programs, sold and supplied unauthorised copies of these programs to Mr Douglas.  ... .

 

     I accept the explanation given by Mr Marks that he did not want Mr Douglas to tell anyone about the programs because he was selling the software at cost to sell the hardware.

 

     On this occasion, Mr Marks said to Mr Douglas that he had given him a batch of Microsoft products but there was some problem with the loading of Excel.  Excel is part of the Microsoft `Office' suite of programs.  The evidence is that Mr Marks then opened an original package and attempted to load the program from the disk in that package but was unsuccessful.  This evidence lends support to the conclusion that Mr Marks did load from original packages from time to time in an authorised manner.

 

     Mr Douglas saw Mr Marks load the Microsoft Office program (which would have contained Excel) from a compact disk onto the January computer which was another computer in the showroom.  The evidence did not establish that the Microsoft Office compact disk from which the program was loaded on the occasion was an unauthorised copy.

 

     In my opinion, the charges in relation to the January computer are not made out."

THE CONTENTIONS OF THE PARTIES ON THE APPEAL

          In their grounds of appeal, Microsoft contend that the primary Judge erred in failing to find that on 25 January 1995, Mr. Marks (i) "reproduced" the whole or a substantial part of their programs;  and (ii) "sold and supplied" to Mr. Douglas a copy of the programs "without supplying the original packaging, user manuals or disks therewith", that is to say, in failing to find that Mr. Marks breached orders 1(a) and (b).  It is further contended for Microsoft that the trial Judge erred in holding that, because the evidence did not establish that the copy of the program "Microsoft Office" sold and supplied by Mr. Marks to Mr. Douglas on 25 January was made from an unauthorised copy of Microsoft's program, the charges were not made out.

          The submissions made on behalf of Mr. Marks are primarily directed toward upholding the findings and conclusions of the trial Judge.  However, though no objection to competency and no notice of contention was filed, it is further submitted for Mr. Marks that Microsoft's appeal was not competent as, in the light of the approach now adopted by the High Court in Witham v Holloway, it was in substance, if not in form, an impermissible attempt to appeal against an acquittal in a criminal proceeding.  Reliance is placed upon "the Mastertouch principle" (Thompson v Mastertouch T.V. Service Pty. Ltd. (No. 3) (1978) 38 FLR 397 ("Mastertouch") at 408, 412). 

CONCLUSIONS ON THE APPEAL

          It will be convenient to deal first with Mr. Marks' challenge to the competency of the appeal.

(a)  The challenge to the competency of the appeal

          On behalf of Microsoft, it is contended that an appeal lies here as of right by virtue of the provisions of s.24(1)(a) of the Federal Court of Australia Act 1976, whereby, subject to exceptions not here material, the Court is invested with jurisdiction to hear and determine, inter alia, appeals from a judgment of the Court constituted by a single Judge.  But, as has been noted, it is submitted for Mr. Marks that, by virtue of the Mastertouch principle, this Court's appellate jurisdiction does not extend to permit an appeal from an acquittal in criminal proceedings, as Mr. Marks contends the dismissal of Microsoft's motion for punishement for contempt should now be regarded, given the approach to contempt proceedings now taken by the High Court in Witham. 

          Moreover, it is contended for Mr. Marks that, even apart from what was decided in Witham, the charges of wilful and contumacious disobedience made in paras.24 and 25 of the statement of charges, coupled with the application for a custodial sentence, are further indications of the criminal character of the proceedings.  In this connection, reliance is placed, for Mr. Marks, upon observations in Mudginberri which referred, in turn, to dicta in Australian Consolidated Press
Ltd. v Morgan (1965) 112 CLR 483 ("Morgan") (per Barwick C.J. at 489;  per Windeyer J. at 499-500).  In Mudginberri, Gibbs C.J., Mason, Wilson and Deane JJ., speaking of cases where wilful or contumacious disobedience of an order amounted to criminal contempt, said (at 108):

     "The point in these cases is that wilful disobedience to a court's order, especially if it occurs in circumstances where the conduct amounts to public defiance, involves a public injury and this calls into play a penal or disciplinary jurisdiction to deal with criminal contempt... ."

 

 

In Mastertouch, the respondent was charged with an offence under s.79 of the Trade Practices Act 1974.  The trial Judge found that the appellant, the informant officer of the Trade Practices Commission, had failed to prove the offence and dismissed the information.  The appellant purported to appeal, as of right, from that judgment.  An objection to competency was upheld.

          Deane J. (with the concurrence of Smithers and Riley JJ.) said (at 412-3):

     "An appeal, as of right, from a judgment of acquittal pronounced by a superior court is not a recognized part of the appellate process in the administration of criminal law.  The existence of such an appeal is contrary to a fundamental principle of the common law.  There is no relevant legislative precedent for the Crown or other prosecutor being given authority as of right to institute or maintain such an appeal.  ...[I]t is a well-established principle of statutory interpretation that a statute is not to be taken as effecting a fundamental alteration in the general law or abolishing or modifying fundamental common law rights unless it uses words that point clearly
and unambiguously to that conclusion.  Applying that principle of construction to the present case, I consider that the conclusion is unavoidable that the general words used in s.24(1)(a) and (b) to confer jurisdiction `to hear and determine appeals' do not confer jurisdiction to hear and determine appeals in circumstances where the existence of the jurisdiction and the right to invoke it would be contrary to a fundamental principle relating to the circumstances in which an appeal should exist.  The right of the subject which finds expression in that principle, namely, the right to be spared the jeopardy of an appeal from an acquittal after a hearing on the merits of a criminal charge by a court of competent jurisdiction, is not, upon proper principles of statutory interpretation, to be swept aside by the general terms of a statute which has no underlying policy requiring that such terms be given such an effect and which contains nothing that points clearly or unmistakably or, indeed, at all, to that effect as having been either contemplated or intended."

 

 

          In Australian Building Construction Employees' and Builders Labourers' Federation v David Syme & Co. Ltd. (1982) 59 FLR 48 ("BLF"), which is also strongly relied on by counsel for Mr. Marks, the appellant brought proceedings against each respondent alleging criminal contempt by interference with the due administration of justice in deregistration proceedings.  The relief sought in the contempt proceedings was refused at first instance.  It was held, applying Mastertouch, that a purported appeal from that refusal was incompetent. 

          Bowen C.J., Evatt and Deane JJ. commenced their reasons with these observations (at 49):

     "Contempt of court has traditionally been divided into criminal contempt and civil contempt.  In essence, the distinction between the two is that criminal contempt ordinarily consists of a wrongful interference with the due administration of justice
while civil contempt ordinarily consists of a refusal or failure to comply with a specific order or direction of, or undertaking given to, a court.  The dividing line between the two forms of contempt is, in some cases, unclear... .

 

     The functions which the two forms of contempt serve tend to overlap.  Criminal contempt primarily exists to protect the due administration of justice in the public interest while civil contempt primarily exists to make the administration of justice effective for the individual litigant.  There is, however, a public element in civil contempt since the administration of justice would be undermined if a specific order or direction of, or undertaking given to, a court of law could be disregarded with impunity... ."

 

 

Their Honours went on to say (at 53):

     "It is true that proceedings for criminal contempt are, in some respects, sui generis.  They are, nonetheless, plainly `criminal in character'... .   A finding of guilt of criminal contempt is a `conviction'... of an `offence'... (`so grave an offence as contempt of court').  In Re Thompson... the Full Court of the Supreme Court of Victoria (Williams, Holroyd and Hood JJ.) held that an appeal against an order attaching the appellant for contempt of court in publishing certain articles in a newspaper commenting on pending proceedings was incompetent for the reason that the proceedings for attachment were `a criminal matter, and therefore there is no appeal to this Court'.  Their Honours commented that the purported appeal was `virtually an appeal from a punishment inflicted by a judge presiding in the Criminal Court for a criminal offence'... (see, also, the equally strong comments of Cussen J. in Re Dunn...).  Acquittal of a charge of criminal contempt after a hearing on the merits is, in our view, an acquittal in criminal proceedings for the purposes of the established principle that no appeal lies from an acquittal on the merits of a criminal charge.  Prima facie, the effect of the decision in [Mastertouch]... is that the general provisions of s.24 of the Act should not be construed as conferring, upon this Court, jurisdiction to hear and determine an appeal from a judgment of acquittal of a charge of criminal contempt after a hearing on the merits by a single judge of this Court or by the Supreme Court of a Territory."

BLF is authority for the absence of any right of appeal in a moving party who is unsuccessful at first instance if the contempt alleged is criminal.  But, as the opening observations there made indicate, the reasoning in BLF did, nonetheless, accept the existence of the distinction between civil and criminal contempts, and the rationale for that distinction.

         

          In Davern v Messel (1984) 155 CLR 21, an argument that Mastertouch was wrongly decided was rejected, but the case was distinguished.  Gibbs C.J. (with the agreement of Wilson J.) said (at 33):

     "If Mastertouch is wrong, it would seem to follow that s.24 would give an unqualified right of appeal to the Federal Court from a judgment of acquittal based on a jury's finding of not guilty... ;  that would be an unprecedented legislative innovation, at least in England or Australia.  I accordingly respectfully agree with the conclusion of Deane J. in ... Mastertouch ... that the general words of s.24 do not affect the right of the subject to be spared the jeopardy of an appeal from an acquittal after a hearing on the merits of a criminal charge by a court of competent jurisdiction... .  Room may remain for argument on the question when a hearing is not one on the merits, but that question raises no difficulty in the present case.

 

     To approve of the decision in ... Mastertouch ... is not, however, to resolve the present question, since, as I have said, that decision dealt with the case of an appeal brought directly from an acquittal.  We are now concerned with the case of an appeal brought from a decision given on an appeal from a conviction.  The question is whether, in such a case, the general words of the statute permitting the second appeal should not be understood to confer on the ultimate appellate court power to correct a patent error of law which has been committed by the first court of appeal.  I can see no reason in principle or authority why in such a case the
general provisions of the statute should be given a restricted meaning."

 

 

Mason and Brennan JJ. were of the same view for similar reasons (at 46-61).  Their Honours noted (at 46) that the decision in Mastertouch "has been consistently followed in the Federal Court" (examples were then given, including BLF), "though not always without reservation".

          Murphy J., in dissent, (at 63) approved Mastertouch and held (at 64) that it applied since "[a]n artificial distinction should not be drawn between acquittals at first instance and at other stages". 

          Deane J. also dissented on the application in that case of s.24(1) of the Federal Court of Australia Act (at 66-70).

          Hinch v Attorney-General for the State of Victoria (1987) 164 CLR 15 ("Hinch") is significant for several reasons.  First, some general observations there made by Deane J. were, as we will see, to be influential as they were to be subsequently endorsed in Witham.  Secondly, and significantly for present purposes, the Full High Court in Hinch later considered the procedural nature of the case before it in the context of an application for costs.  Hinch had been convicted, and fined, for interfering with the due administration of justice.  The conviction for criminal
contempt was upheld and the Crown applied to the High Court for the costs of the High Court appeal.  Mason C.J., Wilson, Deane, Toohey and Gaudron JJ. said (at 89-90):

     "The appellants submit that in the exercise of its discretion the Court should not make any order for costs.  An analogy is sought to be drawn between the present case and an application for special leave to appeal following a trial on indictment for a criminal offence. In the later kind of case, the established practice of the Court is not to make any order for costs, save where the Crown is an unsuccessful applicant... .

 

     However, in our view, the analogy which the appellants seek to draw is not apt for present purposes.  Notwithstanding that a contempt may be described as a criminal offence, the proceedings do not attract the criminal jurisdiction of the court to which the application is made.  On the contrary, they proceed in the civil jurisdiction and attract the rule that ordinarily applies in that jurisdiction, namely, that costs follow the event.  There are many instances of the application of this rule  to cases of contempt of court in this Court, ... .

 

     The distinction between an appeal following a trial on indictment and proceedings for contempt of court has been acknowledged by the Judicial Committee of the Privy Council.  In Shamdasani v King-Emperor... Lord Goddard, delivering the decision of their Lordships, said:

 

          `Where the Crown appears to uphold a conviction in a criminal case it is not the practice to award costs to the appellant in the event of the appeal succeeding.  Although this matter is one which is known as a criminal contempt it obviously is in a different category from an ordinary criminal case.'

 

     See also Perera v The King... .

 

     In every case, it comes down to a question of discretion.  The Court has considered the circumstances of the present case and the submissions advanced for the appellants but sees no reason why the ordinary rule should not apply.  The appellants must therefore pay the costs of the respondent in each case."

In other words, while the contempt was referred to as "criminal" in character, some procedural aspects of the case were seen as different from those of an ordinary criminal case.

          The power of this Court to punish for contempt was fully considered in Mudginberri.  The question in Mudginberri was whether this Court had power to impose a fine for disobedience of an order, i.e. in a case of civil contempt.

          Gibbs C.J., Mason, Wilson and Deane JJ., citing s.31 of the Federal Court of Australia Act and s.24 of the Judiciary Act, noted (at 105-6) that in 1903, the Supreme Court of Judicature "had power to punish for contempt, whether civil or criminal". Their Honours went on to say (at 106):

     "Punishment for contempt serves two functions: (a) enforcement of the process and orders of the court, disobedience to which has been described as `civil contempt';  and (b) punishment of other acts which impede the administration of justice, such as obstructing proceedings in court while it is sitting or publishing comments on a pending case, which have both been described as `criminal contempt'... .  As Lord Diplock said in Attorney-General v Leveller Magazine Ltd.... criminal contempts `... all share a common characteristic: they involve an interference with the due administration of justice either in a particular case or more generally as a continuing process'.

 

     The distinction ...  which has often been made between civil and criminal contempt seems to have originated in the seventeenth century... . The existence of the distinction has been recognized in judgments of this Court... .  The principal
theoretical basis of the distinction is that disobedience to the process and orders of the court in civil proceedings is said to be a civil wrong, a matter between party and party, enforcement being for the private benefit or interest of the party seeking enforcement, whereas impeding the administration of justice is a public wrong.  A secondary basis for the distinction is that the main purpose of sanctions for disobedience in civil proceedings is coercive rather than punitive... ."

 

          Their Honours described (at 107) the "unsatisfactory" nature of the distinction between civil and criminal contempt "attested by the arbitrary classification of some instances of disobedience to an order as examples of criminal contempts", for instance, interference with a ward of the court, adding (at 108) that a rather similar notion lies behind the cases in which disobedience to an order which is wilful or contumacious amounts to criminal contempt.  Reference was then made, in the passage cited above, to the "penal or disciplinary jurisdiction to deal with criminal contempt" where there is wilful disobedience to an order, especially if it involves public defiance.

          In upholding the power to impose a fine in the circumstances of that matter, being, as noted, a case of civil contempt, their Honours said (at 109):

     "There is, accordingly, much to be said for the view that all contempts should be punished as if they are quasi-criminal in character, notwithstanding the adoption of the contrary view by some members of this Court in the decisions to which we have already referred.

 

     However, the distinction between casual, accidental
and unintentional disobedience on the one hand and wilful disobedience on the other offers the prospect of a more limited basis for upholding the imposition of a fine by the Federal Court in the circumstances of this case.  Notwithstanding the statements which have been made from time to time that there is no power to fine for civil contempt, the Chancellors' Court in the sixteenth and seventeenth centuries sometimes made use of severe fines, in addition to other measures, `to force recalcitrant persons to submit to its jurisdiction and to obey its decrees', to use the words of Windeyer J. in Morgan .. ."

 

 

Their Honours added (at 109) that in more recent times, a strong stream of English and Australian authority had emerged to support the imposition of "fines for disobedience ... where [it] is wilful... ."

          The reasoning of the majority in Davern v Messel, above, was considered by a Full Federal Court (Black C.J., Neaves and Spender JJ.) in Hatty v Pilkinton (1991) 28 FCR 352.  Dismissing an objection to competency in circumstances similar to  those of Davern v Messel, the Full Court held that the jurisdiction conferred by s.24 of the Federal Court of Australia Act to hear an appeal from an intermediate appellate court setting aside a conviction, does not depend upon whether the decision of the intermediate appellate court was upon a question of law only.

          In DPP v Chidiac (1991) 25 NSWLR 372 ("Chidiac"), the New South Wales Court of Appeal (Samuels JA., Mahoney and Meagher JJA. concurring) held that a refusal to answer questions for the purposes of an examination under the
Proceeds of Crime Act 1987 constitutes a criminal contempt, and that an appeal from the dismissal of a motion for contempt, in those circumstances, was incompetent. 

          Samuels JA. said (at 375):

     "There are, therefore, two principal issues.  The first concerns the question whether an appeal will lie from an acquittal of a criminal offence;  and the second, if the first does not succeed, is whether, in refusing to answer questions before Deputy Registrar Williams (I can leave out of account the preliminary matters of refusing to be sworn or to affirm), the respondent committed a contempt of court, whether criminal or civil.

 

     The first issue plainly depends upon whether, assuming that the respondent's conduct did constitute a contempt, the contempt was criminal or civil.  If the former, the comparatively recent decision of this Court in Wentworth v Rares ... is authority for the proposition that the appeal will not lie, the principle being that there is no right of appeal against an acquittal of a criminal charge after a hearing on the merits unless specifically and clearly given by statute: Wentworth v Rares (at 5).  Mr Downes QC for the appellant did not suggest that there was any such statutory authority so that the character of the assumed contempt remains the question.  If, however, the contempt, assuming it to have been committed, can be classified as civil, there appears to be no reason why this Court cannot hear the appeal;  and the contrary was not suggested."

 

 

Having referred to BLF, Samuels JA. considered the reasoning in Mudginberri and, in particular, the "quasi-criminal" description of contempt proceedings (at 109 in Mudginberri, quoted above) and said (at 376-7):

     "The concept of `quasi-criminality' is not without its difficulties.  No doubt it requires that all contempts should be dealt with according to the incidents of the summary procedure governed by Pt 55 of the Supreme Court Rules 1970 and thus, in part but not in whole, according to ordinary criminal procedure... . But it is not so clear to me that it must attract the rule which excludes any right of appeal from an acquittal of a criminal charge on the merits... .

 

     It is necessary for present purposes, I think, to place the respondent's conduct in one category or the other.  In favour of regarding it as a civil contempt is the fact that his disobedience was to an order of the court made in civil proceedings in which, for example, the standard of proof is expressly said to be on the balance of probabilities: see s.99 of the Act.  Thus it could be said to be a civil wrong and a matter between party and party.  But that would be, in my view, an inadequate and superficial conclusion which gave scant consideration to the circumstances of the case.

 

     Section 3(1)(a) includes among the principal objects of the Act:

          `(a) to deprive persons of the proceeds of, and benefits derived from, the commission of offences against the laws of the Commonwealth or the Territories.'

 

     It is beyond doubt that although the Act executes its provisions by civil process in the course of civil proceedings, it is intended to relieve convicted criminals (I realise that it may reach further than this) of the profits of their crimes.  It satisfies an important social demand whose rejection by disobedience to orders made to facilitate its purpose impedes the administration of justice and constitutes a public wrong: see Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (at 106)."

 

 

Samuels JA. went on to say (at 377C):

 

     "Alternatively, the respondent's refusal to answer questions amounted to a wilful or contumacious disobedience of the court's orders, and constituted criminal contempt on that account: see Australian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (at 108) and the cases there cited.  There can be no doubt but that the respondent's conduct was deliberate;  and that he knew that what he proposed to do might (indeed, perhaps, would) expose him to penalties."

 

 

In Witham, the alleged contempt was said to be disobedience to orders consisting of the swearing of an affidavit which was said to be in breach of a disclosure of assets order, and of a Mareva injunction, the trial Judge had said that he needed to be "satisfied on the balance of probabilities that the defendant showed at least recklessness in swearing the affidavit";  and that, since the contempt was a "wholly civil contempt, the civil standard of proof applies" (183 CLR at 527, 528).  He found a breach of the orders. 

          An appeal to the Court of Appeal was dismissed on the basis that the civil standard of proof applied, but that the degree of satisfaction varied according to the gravity of the fact to be proved (see 183 CLR at 528, 530).

          In allowing an appeal to the High Court, Brennan, Deane, Toohey and Gaudron JJ. said (at 534):

     "The differences upon which the distinction between civil and criminal contempt is based are, in significant respects, illusory.  They certainly do not justify the allocation of different standards of proof for civil and criminal contempt.  Rather, the illusory nature of those differences and the fact that the usual outcome of successful proceedings is punishment, no matter whether primarily for the vindication of judicial authority or primarily for the purpose of coercing obedience in the interest of the individual, make it clear as Deane J said in Hinch, that all proceedings for contempt `must realistically be seen as criminal in nature'... .  The consequence is that all charges of contempt must be proved beyond reasonable doubt.  The Court of Appeal erred in holding otherwise." [Emphasis added]

 

McHugh J. said (at 538-9):

     "Although criminal contempts take many forms, their characteristic attribute is an interference with the due administration of justice either in a particular case or as part of a continuing process... .  Defiance of the court or its procedures, publication of matters scandalising the court, actions calculated to prejudice the fair trial of a pending case, threats to parties or witnesses and misconduct within the court are examples of criminal contempts... .  Civil contempts, on the other hand, are concerned with failures to comply with judgments or orders... of the courts... .  But civil and criminal contempt overlap... .  Thus, disobedience to the order of a court constitutes criminal contempt when the disobedience is contumacious.  Defiance of the court's order renders criminal what would be otherwise civil contempt... .  Where non-compliance with a judgment or order goes beyond mere breach and involves misconduct, civil contempt also has `a penal or disciplinary jurisdiction [that is] exercised by the court in the public interest'... ."

McHugh J. went on (at 544, fn (105)) to note that Mudginberri had not abolished the distinction between civil and criminal contempt;  and that the High Court was there considering the power of this Court to fine for wilful, but not contumacious, disobedience of an order.

          His Honour said (at 545):

     "It is impossible to justify the continued application of the civil standard of proof in proceedings for contempt where the object of the proceedings is punitive and not remedial.  It is contrary to one of the most fundamental rules of our legal system to commit a person to prison by way of punishment for breach of a curial order when the breach is only proved according to the civil standard.  The consistent application of this basic principle requires that civil contempt proceedings brought to punish the contemnor must be proved according to the criminal standard.  The requirement is probably greater than ever now that the power to fine for civil contempt has been authoritatively established.  It is likely that courts will frequently punish by way of fine in situations where previously they were reluctant to imprison contemnors.  However, I think that in proceedings for civil contempt it is necessary to go further than to merely apply the criminal standard of proof to cases where the object of the proceedings is purely punitive.  Australian courts should follow the approach of the English and Canadian courts and require that all contempts be proved according to the criminal standard of proof." [Emphasis added]

 

McHugh J. added (at 549):

     "The case for abolishing the distinction between civil and criminal contempts is a strong one.   Moreover, it is a course of action that is open to this Court having regard to its duty to rationalise the principles of the common law.  But, having regard to the argument that we heard, there is no need to consider whether we should take that step in this case.  It is sufficient to say that in applying the standard of proof laid down in Peek, the Supreme Court erred.  The appeal must therefore be allowed."

 

 

Having, as has been seen, allowed the appeal on the issue of the appropriate standard of proof, Brennan, Deane, Toohey and Gaudron JJ. went on to consider (at 534) a submission for the appellant that, because the proceedings were "essentially criminal in nature", there was no power to order a "retrial".  Their Honours said (at 534):

     "... [T]o say that proceedings for contempt are essentially criminal in nature is not to equate them with the trial of a criminal charge.  There are clear procedural differences, the most obvious being that criminal charges ordinarily involve trial by jury, whereas charges of contempt do not.  There is no basis, in our view, for importing into the law of contempt the nineteenth century rules which allowed a verdict of guilty, given in a jury trial, to be quashed on appeal, but did not permit of an order for retrial.  Moreover, the issue, so far as contempt is concerned, is not whether there should be a retrial, but whether there should be a rehearing."  [Emphasis added]

 

 

On the question of their discretion in this area, their Honours said (at 535) that, if established, a failure to comply with the orders would involve "a serious interference with the administration of justice", so that it was appropriate to exercise the discretion to remit for rehearing.

          McHugh J. was of the same opinion on both procedural points (at 549-550). 

          On the first aspect, his Honour said (at 549-550):

     "... [A]lthough the principal, if not sole, object of the present proceedings was to punish the appellant, the proceedings were and remain civil and not criminal proceedings for contempt.  They were commenced... under the Rules of the Supreme Court that govern civil proceedings.  Moreover, the appellant's appeal lay to the Court of Appeal pursuant to s.101 of the Supreme Court Act 1970 (NSW) and not to the Court of Criminal Appeal under the Criminal Appeal Act 1912 (NSW).  By s.75A(10) of the Supreme Court Act, the Court of Appeal, in hearing an appeal, `may make any order ... which the nature of the case requires'. 

 

     Under that subsection, the Court of Appeal regularly makes orders allowing appeals and remitting the proceedings back to a Division for further hearing or a rehearing.  There is no reason why that power should be read down to exclude appeals from findings of civil contempt that have been heard in a Division of the Court.  It is true that the provisions of Pt.55 apply to proceedings for criminal contempt that are commenced in the summary jurisdiction.   It might be thought unlikely that, in the absence of an express power, the Court of Appeal was intended to have power to order a rehearing of criminal proceedings after a finding of criminal contempt has been set aside.  But the Supreme Court Act and Pt.55 proceed upon the theory that proceedings for criminal contempt will ordinarily be heard by the Court of Appeal itself and that there is no appeal against a finding of contempt by that Division of the Supreme Court.  It will be time to determine whether the rehearing power conferred by s.75A(10) applies to criminal proceedings commenced under Pt.55 when a case arises where proceedings for criminal contempt have been commenced and have remained in a Division and an appeal has then been taken to the Court of Appeal." [Emphasis added]

 

 

McHugh J. went on to say (at 550):

     "In the ordinary course of events, because the Court of Appeal hears proceedings for criminal contempt, s.75A(10) will not apply to criminal proceedings for contempt although it applies to civil proceedings for contempt.  As I have pointed out, many differences in procedure still exist between civil and criminal contempt proceedings.  It is therefore unsurprising that they give rise to different rights of appeal with different remedies."  [Emphasis added]

 

Mention should also be made of the right of appeal in England in contempt matters. Section 13 of the Administration of Justice Act 1960 (U.K.) now provides a uniform procedure for appeal in both criminal and civil contempt.  Both the plaintiff and the defendant can appeal, as of right, in all cases (see Borrie and Lowe, The Law of Contempt, 3rd ed. (1996) at 531-4).

          Section 13(2) provides:

     "An appeal...shall lie in any case at the instance of the defendant and, in the case of an application for committal or attachment, at the instance of the applicant... ."

 

 

An approach to the interpretation of this provision has been adopted which is liberal and supportive of the right to appeal in all situations. In Attorney-General v Hislop [1991] 1 QB 514, the Attorney-General purported to appeal against the dismissal of a motion, inter alia, that a company be fined for contempt in the form of alleged interference with the course of justice.  An argument that the appeal was incompetent, because a company could not be ordered to be imprisoned, was rejected.

          Parker L.J. said (at 524-5):

     "In the light of this history the words `committal or attachment' cannot be regarded as qualifying the nature of the application but as doing no more than refer to the two procedures for bringing an individual and a company before the court to answer for contempt, one of which is no longer available.  In these circumstances I would accept Mr. Moses' first submission.  I would however also accept it on the simple ground that, if it is rejected, it involves, as I think, defeating the plain legislative purpose."

 

 

Nicholls L.J. said (at 533):

     "In my view the phrase `in the case of an application for committal or attachment' in section 13(2) of the Administration of Justice Act 1960 was intended to be a succinct reference to those cases where the court's jurisdiction to punish for contempt of court was invoked by an application, in contrast to those cases where there was no application but the court acted of its own motion:  for example, where there was contempt in the face of the court.  The phrase is apt for this purpose even though a corporate body, lacking physical form, is strictly incapable of being `committed' or `attached'.  Further, the phrase is applicable in all cases where an alleged contempt is brought before the court on an application, regardless of the particular form of punishment which, either in the application or otherwise, the applicant says he
is seeking.  Punishment is a matter for the court, not for the applicant.  Any other construction of the phrase, on either of these points, would produce bizarre results which Parliament plainly could not have intended."

 

 

Whilst the present position in England now reflects a legislative policy of uniformity of appellate rights in the contempt area which has no statutory counterpart here, a consideration of the earlier position in England is illuminating for present purposes.   

          Before the enactment in 1960 of s.13 of the Administration of Justice Act, the right of appeal marked one of the most important distinctions between criminal and civil contempts.  An anomaly arose from the fact that the Criminal Appeal Act 1907 (U.K.) gave no right of appeal to the Court of Criminal Appeal in cases of summary conviction;  equally, no appeal could lie to the Court of Appeal since no appeal lay to that Court "in any criminal cause or matter".  The question of whether an appeal lay depended on whether the order for attachment or committal was made in the exercise of a criminal jurisdiction, and in deciding this, the Court had regard to the substance of the case (see Halsbury's Laws of England, 4th ed., Vol. 9, para.107, fn.1, at 65).  In O'Shea v O'Shea and Parnell; Ex parte Tuohy ("O'Shea") (1890) 15 P.D. 59 (mentioned in BLF (at 52)), Lindley L.J. said (at 64):

     "There are obviously contempts and contempts;  there is an ambiguity in the word;  and an attachment may sometimes be regarded as a civil proceeding.  For instance, where an order was made by the Court of
Chancery in former days there was no mode of enforcing such order but by attachment.  We must not, therefore, be misled by the words `contempt' and attachment, but we must look at the substance of the thing.  In the present case I have no doubt that the proceeding is a summary conviction for a criminal offence, and therefore no appeal lies."

     [Emphasis added]

 

That was a purported appeal, held to be incompetent, from an order that a writ of attachment be issued against Mr.Tuohy, for contempt, unless he should pay a fine.  The contempt consisted of a publication in a newspaper published by Tuohy, commenting on the conduct of Captain O'Shea, the petitioner in a pending action against his wife for a dissolution of marriage.  Although the matrimonial cause was civil, the contempt was held to be criminal, with the consequence that there was no appeal from the summary conviction.

          In agreeing with Lindley L.J., Lopes L.J. said (at 65):

     "There are different kinds of attachment for contempt.  One kind of attachment is to enforce obedience to an order made in a civil action or proceeding, against one of the parties, in respect of something the doing or not doing of which is not a criminal act.  That would not be an order in a `criminal cause or matter' within s.47. ... But there is another kind of attachment which is the subject of an independent application against a person who is not a party to the suit in respect of an act done outside the suit, and which act is criminal.  That, I think, is within the words of s.47.  The application on which the present order was made was an application by the petitioner in the divorce action, in reference to an attempt made by a stranger to the suit to interfere with the administration of justice in the action, but it is made outside the action.  The object of the

 

     application was to obtain the punishment of the appellant, and the proceeding ended with the order against him.  I am clearly of opinion that this order was made in a criminal matter."

     [Emphasis added]

 

(See also Izuora v The Queen [1953] AC 327 at 335, mentioned in BLF at 53.)

          In my opinion, the "substance" or "object" test is appropriate in our context also.  That is to say, if, in substance, the proceedings at first instance were criminal in the sense that their object were to punish then, as BLF decided, no appeal could lie.  On the other hand, if the substance and object of the proceedings were remedial, then an appeal was competent as in any case of an alleged civil contempt.

          For completeness, it should be noted here that in Morgan, Barwick C.J. said (at 489) that when an order had been contumaciously disobeyed, civil proceedings for the "contempt of procedure" involved could be also proceedings for criminal contempt.  But, as McHugh J. observed in Witham, there are difficulties with this approach, and it may be no longer open.  McHugh J. said (at 545):

     "To attempt to confine the criminal standard to those cases where the object of the proceedings is purely punitive is a course fraught with practical difficulties.  In many cases of civil contempt, the proceedings may be brought for the purpose of
coercing the contemnor as well as punishing that person... . It would border on the absurd to have the punitive aspect of the contempt decided on the criminal standard and the coercive aspect decided on the civil standard.  In other cases of civil contempt, an applicant may seek an order for committal simply to coerce the contemnor to comply with the order or judgment.  However, after the proceedings have commenced, the applicant may become aware of the contemnor's inability to comply with the order and wish to have the contemnor punished.  Without the consent and perhaps even with the consent of the contemnor... it would not be possible to convert proceedings commenced as coercive proceedings with the civil standard of proof into punitive proceedings with the criminal standard of proof... ."  [Emphasis added]

If, as I think, the test for appellability should be one of substance, the question arises when that ought to be determined.  It should, in my view, consistently with the uniform policy applied in Witham in terms of the standard of proof, be decided at the time of the institution of the contempt proceedings.  For reasons similar to those given by McHugh J. above, any other approach is likely to encounter difficulties in its application. A proceeding should be classified as civil or criminal when it is commenced.

          I share the misgivings expressed by Samuels JA. in Chidiac as to the utility of describing any contempt proceedings as "quasi-criminal".  In the interests of certainty in this area, I further agree with his Honour that for present purposes it is necessary to place the alleged conduct in question in one category or the other, that is, civil or criminal.  For some purposes (e.g. costs and retrials) the distinction between civil and criminal contempt remains important.  In other areas (e.g. the standard of proof and the scope of the accrued federal jurisdiction (see Langer v Australian Electoral Commission, Black C.J., Lockhart and Beaumont JJ., 7 March 1996, unreported)), the distinction is now seen to be less important.  But it has not been suggested in any of the authorities that the distinction should be ignored for the purpose of determining whether an appeal lies.

Indeed BLF is to the contrary.

          It follows, in my opinion, that Microsoft had a right to appeal here against the trial Judge's decision if the proceedings were truly of a civil kind.

          I turn now to the characterisation of the present proceedings. 

          As has been seen, on the face of the statement of charges, the charges appeared to be of a mixed character:  The initial allegations (paras.1-23) were concerned with remedial or enforcement aspects, but they were followed, in paras.24-5, by allegations of wilful and contumacious breach. 

              In characterising the proceedings, it is material, I think, to take into account the circumstance that the moving party is trading, and may be expected to continue to trade.  This is consistent with Microsoft's substantial object, in moving for contempt within their own proceedings,
being viewed as remedial rather than punitive in character.  This also underlines the significance of the proceedings to an individual litigant, Microsoft (i.e. a civil contempt), as distinct from the more general interest of the public in the due administration of justice (i.e. a criminal contempt). Both BLF and O'Shea were examples of interferences with the administration of justice, and may be distinguished accordingly.  Further, it is legitimate to take into account here the circumstance that these proceedings were brought under Div.2, rather than Div. 1, of O.40. In the whole of the circumstances, although a difficult question, the case should, in my opinion, be treated as civil, rather than criminal. 

          It follows that I would reject the objection to competency. 

          I turn now to the merits of the appeal.

(b)  The merits of the appeal

          It will be convenient to consider the position under each limb of the consent order separately.

(i)  Order 1(a)

          It will be recalled that this part of the order, referred to in para.6 of the charges, enjoined Mr. Marks "from ... reproducing ... the whole or a substantial part of any of the computer programs... ."

          It was common ground at first instance, and before us, that the act on the part of Mr. Marks of "loading" the computer with the software constituted a "reproduction" by him of a program within the meaning of order 1(a).

          It will be noted, however, that order 1(a) was silent on the question of the relevance, if any, of any consent or licence given by Microsoft for a "reproduction". 

The true construction of this part of the order, by no means a straightforward exercise, must next be addressed.

          Senior counsel for Microsoft referred us to Avel Pty. Ltd. v Multicoin Amusements Pty. Ltd. (1990) 171 CLR 88.  It was there held that the onus of proving the absence of the licence of the owner of the copyright in relation to an issue of infringement under s.37 of the Copyright Act 1968 lay on the party who asserted the infringement.  Mason C.J., Deane and Gaudron JJ. there said (at 94-5) that the reason why this is so is that the absence of such licence constitutes an "element of the wrong" of infringement under s.37 or s.38, as distinct from a justification or excuse for doing something which prima face constitutes infringement. Dawson J. said (at 105) that lack of licence or consent is a "constituent element" of infringement under s.37 and is not by way of proviso, saving, exception or excuse.  His Honour said that it goes "to the substance" of an infringement that there be no licence by the owner;  so that, since the owner must satisfy
the court that the acts complained of constitute an infringement, the burden of establishing the absence of consent lies upon the owner.  McHugh J. held (at 119) that the words "without the licence of the owner of the copyright" are an "integral part of the content" of the obligation imposed by s.37 and that s.39 did not impose a general obligation subject to the excuse or justification that the owner has licensed the act.

          It is true that in question in Avel were the meaning and operation of ss.37 and 38 dealing with infringement by importation for sale or hire (s.37) and infringement by sale and other dealings (s.38); and that the relevant provision here is s.36, dealing with infringement by the doing of an act comprised in the copyright (i.e., in this case to "reproduce" the work in a material form (s.13(1); s.31(1)(a)(i)).  But, so far as is presently material, each of ss.36, 37 and 38 are in the same form.  Each provision includes, as an express ingredient of any infringement, the element that the act was done "without the licence of the owner of the copyright".  It follows that the reasoning in Avel applies to s.36, so that, in the original infringement proceedings in this matter, Microsoft carried the onus of establishing that it had not consented to the act which it alleged had constituted the infringement.

          It was submitted on behalf of Microsoft that,
against that background, the omission from consent order 1(a) of any reference to its licence, or consent, is an indication that, when drafting the consent order, the parties intended, in effect, to reverse the approach taken in Avel.  Thus, the argument ran, the onus lay on Mr. Marks to establish that Microsoft had given its consent.  It was argued that it was reasonable to assume that this was done in Microsoft's interests, for practical reasons, so that in any future contempt proceedings, Microsoft would not have to assume the burden of proving the negative, i.e. that Microsoft had not consented.

          The construction of order 1(a) in this respect is not obvious.  There are at least three possible interpretations open:  (1) any consent given by Microsoft is immaterial;  (2) the onus lies on Microsoft to prove that it did not consent (i.e. the Avel approach); (3) the onus lies on Mr. Marks to prove that Microsoft did consent.

          I have great difficulty in accepting that (1), above, could have been intended.  The possibility of a waiver or consent by Microsoft in respect of its rights under order 1(a), followed by proceedings instituted by Microsoft for contempt for failure to observe the order, could hardly have been in contemplation of the parties (see Kerr, A Treatise on the Law and Practice of Injunctions, (1927), 6th ed. at 670-1; Harman v Secretary of State for the Home Department [1983] 1
AC 280 (at 310)).

          If it is accepted that absence of consent is an element, (2) or (3) must be applicable.  Yet both have unsatisfactory aspects.

          With respect to (2), although this interpretation has the virtue that it accords with the Avel approach, it gives no weight to the conspicuous absence of any reference to consent, an important feature of the structure of ss.36, 37 and 38.

          As far as concerns (3), a difficulty is that this approach contradicts the settled construction of s.36 as the background of proceedings under that provision.  Given that settled construction, one would have expected to find an explicit provision making it clear, if this was intended, that the ordinary (Avel) onus was proposed to be reversed.

          I incline to (2) as the preferable construction here, in line with the settled construction of s.36.  But it must be acknowledged that this outcome can be achieved only by a process of necessary implication, something which, in the case of "speaking" orders, courts are often reluctant to undertake (see Repatriation Commission v Nation (1995) 57 FCR 25 (at 33-4)).  Since, for reasons I will shortly give, it is not necessary that I arrive at a final conclusion on the
construction of order 1(a) in this respect, I express no more than the tentative preference for (2), above. I accept that reasonable minds could reasonably come to different conclusions as to its meaning in this particular respect.

          Yet it must follow, in my opinion, that to this extent, order 1(a) should be treated as equivocal and its meaning as ambiguous.  That being so, and since the question whether Microsoft had, in fact, consented was put in issue in the contempt proceedings, it must further follow that any attempt by Microsoft to move for contempt for alleged breach of such an order must have failed. 

          In any event, this outcome probably follows from an application of the general observations made in Witham on the relevance of the criminal standard of proof; there is a doubt as to the meaning of order 1(a) in an important respect, and, as I have said, that doubt is a reasonable one.  In any event, the approach suggested is supported by authority which appears to be squarely in point. In Redwing Limited v Redwing Forest Products Limited [1947] 177 L.T. Rep. 387 ("Redwing"), Jenkins J. said (at 390):

     "I cannot say I think that the undertakings contained in the order were clearly drawn and I cannot say I regard the questions of construction involved in them as entirely easy questions, but in my judgment, a defendant cannot be committed for contempt on the ground that upon one of two possible constructions of an undertaking being given he has broken his undertaking.  For the purpose of relief of this character I think the undertaking must be
clear and the breach must be clear beyond all question."  [Emphasis added]

In P.A. Thomas & Co. v Mould [1968] 2 QB 913, O'Connor J. said (at 923):

     "In the present case the court has granted the injunction in the terms prayed by the plaintiffs.  That is the plaintiffs' own doing.  If they wish not to trust the court and its procedure for protecting their legitimate interests by disguising the true nature of their `know-how' in the form which has been done in the present case, they cannot complain if at a later stage they are met with the answer with which they have been met here, of saying: `You are alleging a breach of the injunction:  you have done thus and so, thus and so, and thus and so,' and then invite the court to draw the inference that because it is different from that which was set out in statements sworn to by the plaintiffs it must be confidential material - part of the `know-how,' part of the material, upon which the injunction bites.

 

     I am not prepared to say that that has been established here.  It may well be so.  It may be that these inferences can be drawn on all kinds of balances of probabilities at the end of the day when this case is tried.  But where parties seek to invoke the power of the court to commit people to prison and deprive them of their liberty, there has got to be quite clear certainty about it.  I see no such certainty in the present case and I am not prepared to give any relief to the plaintiffs on this motion:  it must be dismissed." 

     [Emphasis added]

 

The observations of Jenkins J. in Redwing, above, were cited by Owen J. in Morgan (at 515-6).  His Honour said (at 516):

     "With these statements of general principle I agree.  In my opinion the ambiguity of and lack of precision in the appellant's undertaking which, it should be remembered, was originally drawn by the respondents' solicitors in the District Court proceedings are such that a finding of contempt should not be made."

 

On the other hand, it should be noted that Barwick C.J. said
in Morgan (at 492):

     "The appellant submitted that unless the language of the undertaking was unambiguous and certain, it should not be enforced by contempt proceedings: and sought support for the submission in Redwing... and Iberian Trust Ltd. v Founders Trust and Investment Co.... .  In my opinion, these authorities do not support this conclusion.  If the order or undertaking is so expressed as to be meaningless, there is of course nothing which can be enforced.  But, if it bears a meaning which the Court is satisfied is one which ought fairly to have been in the contemplation of the person to whom the order was directed or who gave the undertaking as a possible meaning, the fact that that meaning results from a process of construction and involves a choice of possible meanings does not, in my opinion, preclude the Court from enforcing the order or undertaking in the sense which the Court assigns to it."

 

 

(cf. Watkins v Wright [1996] 3 All ER 31 at 42.)

          However, in expressing the majority view on that aspect, and agreeing with Owen J., the other member of the Court, Windeyer J., said (at 506):

     "I express no opinion as to the correctness of the construction of the appellant's undertaking that Else-Mitchell J. adopted.  I do not mean to say that it was erroneous.  But it seems to me impossible to say that the undertaking was clear or that a breach of it was certainly established.  I agree in the view that my brother Owen expresses in the judgment that he is about to deliver that on this ground, if on no other, the appeal should be allowed."

 

 

The present case is similar to Morgan and should, I think, be contrasted with, for example, the "clear and unambiguous" injunction enforced by Southwell J. in McNair Anderson Associates Pty. Ltd. v Hinch [1985] VR 309 (at 315).

          In my opinion, the appeal from this part of the judgment fails by reason of the uncertainty inherent in order 1(a). 

          It becomes unnecessary to consider other issues, mainly factual, which were raised before us in this connection on behalf of Mr. Marks.

(ii)  Order 1(b)

          It will be recalled that this part of the order used language different in form and in substance from order 1(a).  Mr. Marks was enjoined here from "supplying ... any unauthorised copy" of a Microsoft program.  Whilst there is no ambiguity in this provision, it is common ground that the onus was on Microsoft to prove, as a fact, that the copy was not "authorised", that is, was made without Microsoft's consent.

          It will further be remembered that, according to the evidence of Ms. Chatillon, the consent of Microsoft could be presumed where a retailer loads (reproduces) a program, if  the retailer supplies original disks and manuals to the retail buyer.  In that situation, the retailer could fairly be seen to be acting in the loading process as the agent for the buyer of Microsoft's original disks and manuals.  Such a buyer would have, presumably, a licence, either expressly or by implication, from Microsoft to load the program into the buyer's own computer, and, if requested, the retailer may do
this for the buyer.

          There was a dispute at the trial whether these circumstances existed here, so that Microsoft's consent could be inferred, and so that any copy would be treated as "authorised".

          As has been said, Tamberlin J. expressed reservations about the inherent credibility of the affidavit evidence of Mr. Douglas, notwithstanding that he was not cross-examined.  Moreover, his Honour was not prepared to find that the evidence established that the program that was loaded was not, in all the circumstances, "authorised".  The evidence of the earlier opening of the original package, and the absence of any attempt by Microsoft to prove the terms of its licence to a retail buyer, were seen by the Judge to reinforce his conclusion. 

          But, in any event, it is clear that, on this aspect of the consent order, Microsoft had the burden of proving, beyond reasonable doubt, that it had not authorised the loading.  In the way in which the hearing was conducted, this became a factual issue.  Once his Honour's reservations as to the credibility of Mr. Douglas' version of the events is accepted, and his Honour's unfavourable impressions were not sought to be challenged before us, it is difficult to resist his Honour's conclusion that the criminal onus had not been
discharged.

          I would dismiss this part of the appeal also.

(c)  Costs

          Although in his reasons, Tamberlin J. invited the parties to make submissions on costs, this has not yet happened.  The costs at first instance should abide the decision of his Honour.

          As to the costs of the objection to competency and of the appeal, each side has had a measure of success.  In those circumstances, there should be no order for the costs of the appeal.

(d)  Orders proposed

          I propose these orders:

1.   Appeal dismissed.

2.   Costs at first instance to abide the decision of Tamberlin J.

3.   No order as to the costs of the appeal.

              I certify that this and the preceding forty-five (45) pages are a true copy of the Reasons for Judgment herein of his Honour Justice Beaumont.

                   Associate

                   Dated:    14 August 1996 

IN THE FEDERAL COURT OF AUSTRALIA)

NEW SOUTH WALES DISTRICT REGISTRY)         No NG 082 of 1996

GENERAL DIVISION                  )

  On appeal from a Judge of the Federal Court of Australia

          BETWEEN:

MICROSOFT CORPORATION

                     First Appellant

MICROSOFT PTY LIMITED

                                            Second Appellant

          AND:

RODNEY DAVID MARKS

                          Respondent

CORAM:    Beaumont, Lindgren, Lehane JJ

PLACE:    Sydney

DATE:     14 August 1996

                    REASONS FOR JUDGMENT

LINDGREN J

I have read a draft of the Reasons for Judgment of Beaumont J and agree with the substance of his Honour's reasons and with the orders which he proposes.  I make the following further observations, taking his Honour's Reasons for Judgment as having been read.

(a)  The challenge to the competency of the appeal

Further High Court support for the recognition of the non-criminal character of disobedience, per se, of an injunction is found in the following passage from the joint judgment of all five members of the High Court (Gibbs CJ, Mason, Wilson, Brennan, Dawson JJ) who sat in Doyle v Commonwealth of Australia (1985) 156 CLR 510:

     "Although disobedience of an injunction is not a criminal offence (Australian Consolidated Press Ltd v. Morgan [(1965) 112 C.L.R. 483, at pp. 497-498]) and a proceeding for the committal of a person who has wilfully disobeyed an order of the court is not a criminal proceeding (see La Trobe University v. Robinson and Pola [[1973] V.R. 682, at p. 688]) except possibly where the proceedings are grounded upon a contumacious or defiant contempt of the court (Australian Consolidated Press Ltd. v Morgan [(1965) 112 C.L.R., at pp. 489, 501-502]), a proceeding for committal may result in a very serious interference with the liberty of the subject - indefinite confinement.  Safeguards similar to those appropriate in criminal proceedings therefore apply.  Speaking generally, the notice of motion for committal must be served personally on the person sought to be committed, the charge must be distinctly stated in the notice of motion or other application and the person sought to be committed must be given a proper opportunity to answer the charge." (at 516)

This passage was not referred to in argument or in either of the judgments in Witham v Holloway (1995) 183 CLR 525, or in the earlier case, Hinch v Attorney General (Vict) (1987) 164 CLR 15.  In La Trobe University v Robinson and Pola [1973] VR 682, referred to in the passage quoted, a Full Court of the Supreme Court of Victoria treated as an appeal in a civil matter and not in a criminal matter, an appeal to it from a decision of a single judge dismissing applications to set aside orders granting leave to issue writs of attachment for contempt consisting of breaches of an injunction.  (The Full Court held that the relevant test to be applied was to inquire as to the nature of the action or other proceeding in which the order appealed from was made, not as to the purpose of that order.)

(b)  The merits of the appeal

Further support for the proposition that a finding of contempt will not be made where the terms of the relevant order or undertaking are misleading, unclear or ambiguous is found in Spokes v Banbury Board of Health (1865) LR 1 Eq 42 at 48-49; Iberian Trust Ltd v Founders Trust and Investment Company Ltd [1932] 2 KB 87 at 95-96; Trade Practices Commission v C G Smith Pty Ltd (1978) 30 FLR 368 (FCA/Bowen CJ) at 374; and Bryant v Keith Harris & Co Ltd (1980) 33 ALR 437 (FCA/FC) at 439 (Franki J); and see Borrie & Lowe, The Law of Contempt (3rd ed, 1996) at 579.

Even according to the approach taken by Barwick CJ in Australian Consolidated Press Ltd v Morgan (1965) 112 CLR 483 at 492, to which Beaumont J refers, the Court could not be satisfied in the present case that it "ought fairly to have been in the contemplation of" Mr Marks "as a possible meaning" of Order 1 (a) that it would be a breach of it for him to reproduce a Microsoft program with Microsoft's consent.  On the assumption that there is no breach if Microsoft consents, the question arises whether absence of consent is an element of the contempt to be proved by Microsoft, or the existence of consent is exculpatory and therefore something to be proved by Mr Marks.  The answer is far from clear and, like Beaumont J, I do not find it necessary to resolve the issue.

The proposition that a contempt will not be found where the terms of an order or undertaking are unclear, ambiguous or apt to mislead (except, perhaps, if the prosecutor proved that the contemnor understood them in accordance with what the Court holds to be their true meaning) must be distinguished from certain other propositions.  It does not signify that there is no breach wherever there is difficulty in the construction of the terms of an order or injunction which it falls to a court to resolve.  Nor does it signify that contempt will not be found wherever an alleged contemnor did not understand the terms of an order or injunction according to their true meaning, much less wherever an alleged contemnor was unaware that his or her conduct constituted a breach of the order or undertaking (cf Watkins v A J Wright (Electrical) Ltd [1996] 3 All ER 31).

              I certify that this and the preceding 3 pages are a true copy of the Reasons for Judgment of the Honourable Justice Lindgren.

              Associate:

              Dated:             14 August 1996

 

IN THE FEDERAL COURT OF AUSTRALIA         )

NEW SOUTH WALES DISTRICT REGISTRY         )

GENERAL DIVISION                          )No. NG082 of 1996

  ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

         BETWEEN:    MICROSOFT CORPORATION

                                             First Appellant

                        MICROSOFT PTY LIMITED

                                            Second Appellant

         AND:        RODNEY DAVID MARKS

                                                  Respondent

CORAM:   Beaumont, Lindgren and Lehane JJ

PLACE:   Sydney

DATE:    14 August 1996

                    REASONS FOR JUDGMENT

LEHANE J:  I have read the judgment of Beaumont J.  I agree that the orders which his Honour proposes should be made and I agree also with his reasons.

                     I certify that this page is a true copy of the Reasons for Judgment of the Honourable Justice Lehane.

                     Associate: 

                     Dated:  14 August 1996

Heard:               29 May 1996

Place:               Sydney

Decision:               14 August 1996

Appearances:         Mr D K Catterns QC and Ms S J Goddard of counsel instructed by Mallesons Stephen Jaques appeared for the appellants.

                     Messrs B A M Connell and D R Sibtain of counsel instructed by Belleli King and Associates appeared for the respondent.