FEDERAL COURT OF AUSTRALIA

CONTEMPT OF COURT - breach of undertakings - power to impose term of imprisonment suspended on condition that contemnor refrain from breaching Part V the Trade Practices Act 1974 (Cth) for two years.

Trade Practices Act 1974 (Cth), Part V

Australian Securities Commission v Macleod (No 3) (1993) 40 FCR 475, applied

Lee v Walker [1985] 1 All ER 781, applied

AMIEU v Mudginberri Station Pty Ltd (1986) 161 CLR 98, followed

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v GOLDSTAR CORPORATION PTY LTD & ANOR

QG 60 OF 1998

DRUMMOND J

6 NOVEMBER 1998

BRISBANE

THE COURT ORDERS THAT:

1.                  The second respondent, Grant Warren Hudson, be imprisoned for a period of two months in respect of the following contempts of court:

(A)       Breaching the undertakings given by him to this Court on 2 July 1998 by:

(a)                instructing josephine ann unsworth, on 20 or 21 august 1998, to engage in the following conduct in connection with the supply or possible supply to persons of advertising in “The National Federal State and Local Government Advertiser” by Australia’s Flag Publishing:

(i)                  to represent to persons that advertisements or directory entries had previously been ordered or agreed to by those persons or on behalf of those persons when they had not been so ordered or agreed; and

(ii)                to send to those persons documents which misled, or were likely to mislead, those persons as to the effect of signing or returning those documents.

(B)              being a party to and knowingly concerned in the conduct of the first respondent described below:

(a)        The first respondent breached the undertakings given on its behalf to this Court on 2 July 1998 by the second respondent and by its employee named “Brent” between 19 August 1998 and 21 August 1998 instructing Josephine Ann Unsworth to engage in the following conduct in connection with the supply or possible supply to persons of advertising in “The National Federal State and Local Government Advertiser” by Australia’s Flag Publishing:

(i)                  to represent to persons that advertisements or directory entries had previously been ordered or agreed to by those persons or on behalf of those persons when they had not been so ordered or agreed; and

(ii)                to send to those persons documents which misled, or were likely to mislead, those persons as to the effect of signing or returning those documents.

2.                  A warrant for the second respondent’s committal to prison for a period of two months issue.

THE COURT DIRECTS THAT:

1.                  The warrant lie in the Registry to the intent that it not be executed, provided that the second respondent refrains by himself from contravening any of the provisions of Part V the Trade Practices Act 1974 (Cth) for two years and that he also refrains for two years from being knowingly involved in the contravention by anyone else of any of the provisions of Part V the Trade Practices Act 1974 (Cth).

THE COURT FURTHER ORDERS THAT:

1.                  The second respondent pay the applicant’s costs of and incidental to the proceedings for contempt against him on an indemnity basis, ie, to the intent that the applicant shall be entitled to recover from the second respondent all the costs incurred by it in connection with that proceedings, save such costs (if any) as may have been unreasonably incurred.

2.                  The applicant has liberty to apply for the issue of the warrant.

3.                  The first respondent be fined the sum of $10,000.

4.                  The first respondent pay the applicant’s costs of and incidental to the contempt proceedings against it on an indemnity basis, ie, to the intent that the applicant shall be entitled to recover from the first respondent all the costs incurred by it in connection with that proceedings, save such costs (if any) as may have been unreasonably incurred.

5.                  Each of the first respondent and the second respondent pay the costs of the applicant, of and incidental to the application for interlocutory injunctive relief, and the applicant shall have liberty to tax those costs forthwith.

Note:                Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

I will deal with Mr Hudson first.  I have found that he is guilty of two serious contempts of court.  The first is constituted by his involvement in contempt committed by the company of which he was managing director, against a background of the failure I have referred to in my reasons by Mr Hudson to take any proper steps to impress upon staff of the first respondent how they should conduct themselves to avoid putting the first respondent in breach of the undertakings.  The second contempt which I found Mr Hudson to be guilty of is constituted by his conduct in giving explicit instructions personally to Ms Unsworth to engage in conduct in mid-August which was plainly contrary to the undertakings that he gave himself to the Court.

In Australian Securities Commission v Macleod (No 3) (1993) 40 FCR 475, I referred at 480 to the pattern of sentences of imprisonment imposed in recent times on persons guilty of serious contempts of court constituted by breaching court orders or undertakings given to the Court, being a pattern of orders for imprisonment from two to six months.

In my opinion, the serious and deliberate nature of Mr Hudson’s contempts calls for the imposition of such a punishment as will impress upon Mr Hudson the gravity of his misconduct.  I am not at all sure from the submissions he has made that he fully appreciates just how serious his misconduct is, in so far as he seems still to want to suggest that the responsibility for much of what went wrong is not his, when quite plainly he was personally involved in what I have described as deliberate and serious contempts of court.

I have power, in addition to the power to impose a sentence of imprisonment for contempt of court, to suspend any such sentence on conditions.  In Lee v Walker [1985] 1 All ER 781, the English Court of Appeal affirmed the existence of the longstanding inherent or common law power, as it is sometimes described, of the English High Court to suspend committal orders made in respect of contempts and to suspend those committal orders on conditions.  In Morris v Crown Office [1970] 2 QB 114, the Master of the Rolls at 125 also discussed the common law power of the English High Court to postpone such a sentence, to bind over the contemnor to be of good behaviour and in other ways to suspend the operation of a sentence of imprisonment for contempt.

In AMIEU v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 114, in a joint judgement of the Chief Justice and Mason, Wilson and Deane JJ, their Honours referred to the wide-range of remedies available to courts, including this Court, to deal with persons in contempt of court, including contempt constituted by failure to comply with court orders.  In Macleod’s case, I considered that the AMIEU case, read with the English authorities, demonstrated that the powers of this Court in respect of punishment for contempt are wide and in appropriate cases authorise the imposition of consecutive sentences of imprisonment.  For the same reasons, I consider that this Court’s power to punish for contempt includes power to suspend on condition any sentence of imprisonment that it might impose in respect of contempt. 

I will therefore order that the second respondent be imprisoned in respect of the contempts I have found him to be guilty of for two months.  I will further order that a warrant for his committal to prison issue, but that that warrant lie in the Registry to the intent that it not be executed, provided that, Mr Hudson refrains by himself from contravening any of the provisions of Part V the Trade Practices Act 1974 (Cth) for two years, and that he also refrains from being knowingly involved in the contravention by anyone else of any of the provisions of Part V the Trade Practices Act for two years.

I will also order that Mr Hudson pay the applicant’s costs of and incidental to the proceedings for contempt against him on an indemnity basis, ie, to the intent that the Commission shall be entitled to recover from Mr Hudson all the costs incurred by it in connection with that proceedings, save such costs if any as may have been unreasonably incurred.

So far as the first respondent is concerned, I have already indicated in my reasons that I regard it as involved in serious contempts of court.  I will order that it be fined the sum of $10,000.  The first respondent must also pay the Commission’s costs of and incidental to the contempt proceedings against it on the same indemnity basis that I have ordered Mr Hudson to pay the Commission’s costs of the contempt proceedings in respect of him.

So far as concerns the proceedings for interlocutory injunctive relief which I have granted, it seems to me that the Commission is entitled to an order that it have its costs of those proceedings against Mr Hudson, and the first respondent now, for the reason that it would have been unnecessary for the Commission to come to court to seek such injunctive relief but for the giving to the Court by Mr Hudson and the first respondent of undertakings which both promptly breached.  The Commission should also have leave to tax those costs forthwith.

Associate:                                                        

Dated:              6/11/98