FEDERAL COURT OF AUSTRALIA

Forestview Nominees Pty Ltd v Perron Investments Pty Ltd [1999] FCA 405

PROCEDURE – contempt – disobedience of orders of court – liability of principal for omission of solicitor in disobedience of court order.

PROFESSIONS AND TRADES – lawyers – solicitor and client – authority – litigation – obligation to comply with order of court – whether liability to fail to comply with such order.

Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98, considered

Witham v Holloway (1995) 183 CLR 525, considered

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

Re Bramblevale Ltd [1970] Ch 128, considered

Knight v Clifton [1971] Ch 700, considered

Stancomb v Trowbridge UDC [1910] 2 Ch 190, considered

Yorke v Lucas  (1985) 158 CLR 661, considered

Giorgianni v The Queen (1985) 156 CLR 473, considered

Heatons Transport (St Helens) Ltd v Transport and General Workers’ Union [1973] AC 15, distinguished

In Re: Supply of Ready Mixed Concrete (No 2) [1995] 1 AC 456, considered

Tesco Supermarkets Ltd v Nattrass [1972] AC 153, considered

Mousell Brothers Ltd v London and North-Western Pacific Railway Co [1917] 2 KB 836, considered

H L Bolton (Engineering) Co Ltd v T J Graham & Sons Ltd [1957] 1 QB 159, considered

Rantzen v Rothschild (1865) 14 WR 96, considered

Director of Fair Trading v Pioneer Concrete (UK) Ltd [1995] 1 AC 457, considered

Prestwich v Poley (1865) 18 CB (NS) 805, considered

Re Newen;  Carruthers v Newen [1903] 1 Ch 812, considered

Griffiths v Evans [1953] 1 WLR 1424 (CA), considered

Spedley Securities Ltd v Bank of New Zealand (1991) 26 NSWLR 711, considered

Maxwell;  Re a Bill of Costs (1955) 72 WN (NSW) 333, considered

In Re Freston (1883) 11 QBD 545, discussed

Seldon v Wilde [1911] 1 KB 701, discussed

Colonial Mutual Life Assurance Society Ltd v The Producers and Citizens Co‑operative Insurance Co of Australia Ltd (1931) 46 CLR 41, followed

FORESTVIEW NOMINEES PTY LTD, SILKCHIME PTY LTD v PERRON INVESTMENTS PTY LTD, BELMONT FORUM SHOPPING CENTRE PTY LTD

WAG 92 OF 1998

On appeal from a single judge of the Federal Court of Australia

THE COURT ORDERS THAT:

1.                  The appeal be allowed.

2.                  The orders of Carr J made on 25 June 1998 be varied by setting aside the following:

(a)                that part of order 1 as requires the applicants to pay the respondents’ costs to be taxed on the basis of all reasonable costs incurred in relation to the notice of motion to the notice of motion before Carr J; and

(b)               that part of order 6 as requires the respondents be indemnified by the applicants in respect of the costs of Mr Carey in relation to the notice of motion, which costs are to be paid on the basis that all reasonable costs incurred in relation to the notice of motion before Carr J be paid.

3.                  The respondent pay the first and second appellants’ costs of the appeal and of the motion before Carr J.

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

On appeal from a single judge of the Federal Court of Australia

REASONS FOR JUDGMENT

SPENDER J

1                     The question on this appeal is whether a principal is vicariously liable for conduct by the principal’s solicitor in contempt of court.

2                     The learned primary judge, Carr J, found the appellants and their solicitor guilty of contempt of court on 25 June 1998.  His Honour’s conclusion is shared by Cooper J, each of them being of the view that a principal is liable on the basis of agency, and that the solicitor, even when engaging in conduct that constitutes contempt of court, is acting on behalf of and within the scope of the authority conferred by the principal.  Nicholson J, on the other hand, is of the view that the omission by a solicitor to comply with an order of the court is outside the scope of authority given by the principal to the solicitor and, as a consequence, cannot create a liability in the principal.

3                     I also am of the view that an innocent principal is not vicariously liable for the contempt committed by the principal’s solicitor.

4                     The facts are set out in detail in the judgment of Nicholson J, with which I respectfully agree.  However, in light of the fact that I disagree with the conclusion of the learned primary judge, I wish to add a few observations of my own.

5                     The appellants through their solicitor issued subpoenas on the respondents seeking business records.  The court made confidentiality orders in respect of the documents to be produced in accordance with the subpoenas.  It is significant that the orders of the court were directed at denying to the appellants knowledge contained in those documents.  Access to the documents was limited to the legal representatives of the appellants and the respondent, and one or more nominated expert witnesses.  The solicitor ignored the safeguards dealing with the regime of disclosure, with the consequence that the commercially sensitive documents provided by the respondents were forwarded by the solicitor to a potential witness in breach of the confidentiality safeguards.  Neither of the appellants was aware of the conduct of the solicitor.  The wrongful acts of the solicitor, constituting contempt, were not specifically instigated, authorised or ratified by either of the appellants.  In any relevant sense, each of the appellants was “innocent” of any wrongdoing.

6                     The distinction between criminal and civil contempt was described as “unsatisfactory” by Gibbs CJ, Mason, Wilson & Deane JJ in Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 107.

7                     Their Honours had earlier at 107 identified the underlying rationale of the contempt power in the following passage:

“The theoretical distinction between the two classes overlooks the underlying rationale of every exercise of the contempt power, namely that it is necessary to uphold and protect the effective administration of justice.  Although the primary purpose in committing a defendant who disobeys an injunction is to enforce the injunction for the benefit of the plaintiff, another purpose is to protect the effective administration of justice by demonstrating that the court’s orders will be enforced.  As the Authors of Borrie and Lowe’s Law of Contempt, 2nd ed (1983) say, at p 3:

“If a court lacked the means to enforce its orders, if its orders could be disobeyed with impunity, not only would individual litigants suffer, the whole administration of justice would be brought into disrepute.”

8                     In the later case of Witham v Holloway (1995) 183 CLR 525 Brennan, Deane, Toohey & Gaudron JJ at 534 commented:

“The differences upon which the distinction between civil and criminal contempt is based are, in significant respects, illusory.”

9                     Notwithstanding the maintenance of the distinction between criminal and civil contempt (a distinction McHugh J suggested in Witham v Holloway at 549 was one for which there was a strong case for abolition), the present question, in my opinion, has to be resolved on the basis that this proceeding for contempt, albeit civil, “must realistically be seen as criminal in nature”.

10                  In Mudginberri, Gibbs CJ, Mason, Wilson & Deane JJ said at 109:

“There is…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.”

11                  That view was stated in a firmer fashion by the majority in the High Court in Witham v Holloway.  They accepted the view expressed by Deane J in Hinch v Attorney-General Victoria (1987) 164 CLR 15 at 49, where his Honour said:

“Proceedings seeking the imposition of [a fine or imprisonment] upon an alleged contemnor..must realistically be seen as essentially criminal in nature…”

12                  As a consequence, the High Court in Witham v Holloway concluded that in all proceedings for contempt, whether civil or criminal, it must be proved beyond a reasonable doubt.

13                  This conclusion had earlier been reached in the United Kingdom in Re Bramblevale Ltd [1970] Ch 128 where in the Court of Appeal Lord Denning MR said at 137:

“A contempt of court is an offence of a criminal character.  A man may be sent to prison for it.  It must be satisfactorily proved.  To use the time-honoured phrase, it must be proved beyond all reasonable doubt.”

14                  Re Bramblevale has been followed by other United Kingdom decisions including the decision of the Court of Appeal in Knight v Clifton [1971] Ch 700, where Russell LJ said at 707:

“Contempt of court, even of the type that consists in breach of an injunction or undertaking, is something that may carry penal consequences, even loss of liberty, and the evidence required to establish it must be appropriately cogent.”

15                  It seems to me that if all proceedings for contempt have to be seen as criminal in nature, there is no room for the imposition of vicarious liability.  At the core of the notion of criminal responsibility is the requirement of mens rea.

16                  It may be accepted that it is not necessary to show that the defendant is intentionally contumacious nor that he or it intends to interfere with the administration of justice.  Sacks LJ said in Knight v Clifton at 721:

“…when an injunction prohibits an act, that prohibition is absolute and is not to be related to intent unless otherwise stated on the face of the order…”

17                  In the well known passage in Stancomb v Trowbridge UDC [1910] 2 Ch 190 Warrington J said at 194:

“…if a person or a corporation is restrained by injunction from doing a particular act, that person or corporation commits a breach of the injunction and is liable for process for contempt, if he or it in fact does the act, and it is no answer to say that the act was not contumacious in the sense that, in doing it, there was no direct intention to disobey the order.”

18                  In my opinion, an authorisation to a solicitor by the retainer of him to conduct litigation for a client does not mean that the principal is liable, as if for a crime, for conduct by the solicitor that is in contempt of court.

19                  The law in Australia has resolutely rejected any notion of imputed criminal liability.

20                  The House of Lords in Director of Public Prosecutions v Smith [1961] AC 290 upheld a direction based on the proposition that the accused as a reasonable man must have intended the natural and probable consequences of his conduct.  In Parker v The Queen (1963) 111 CLR 610, Sir Owen Dixon, with the authorisation of all the other members of the High Court, said that Smith’s Case should not be used as authority in Australia at all.  His Honour said at 632:

“There are propositions laid down in the judgment which I believe to be misconceived and wrong.  They are fundamental and they are propositions which I could never bring myself to accept."”

He commenced his observations on Smith’s Case by noting at 632:

“In Stapleton v The Queen (1952) 86 CLR 358 we said [at 365]:

‘The introduction of the maxim or statement that a man is presumed to intend the reasonable consequences of his act is seldom helpful and always dangerous.’ “

21                  In Yorke v Lucas  (1985) 158 CLR 661 the High Court was concerned with civil liability created by s 75B of the Trade Practices Act 1974 (Cth).  That section provided that a reference to a person involved in a contravention shall be read as a reference to a person who - “(a) has aided, abetted, counselled or procured the contravention; (b) has induced, whether by threats or promises or otherwise, the contravention; (c) has been in any way, directly or indirectly, knowingly concerned in, or party to, the contravention; or (d) has conspired with others to effect the contravention”. 

22                  The High Court, applying Giorgianni v The Queen (1985) 156 CLR 473 held that for paragraph (a) of s 75B to apply to a person, it must be shown that he intentionally aided, abetted, counselled or procured a contravention, and to form the necessary intent he must have knowledge of the essential matters which make up the contravention, whether or not he knows that those matters amount to a contravention; and before a person can be said to have been a party to a contravention within paragraph (c) of s 75B, he must be an intentional participant, the necessary intent being based upon knowledge of the essential elements of the contravention.  The High Court acknowledged that the words “aided, abetted, counselled or procured” were taken from the criminal law, and a person will be guilty of aiding, abetting, counselling or procuring a criminal offence only if he intentionally participates in it.  To form the requisite intent the person must have knowledge of the essential matters which go to make up the offence, whether or not he knows that those matters amount to a crime.

23                  I have referred to Yorke v Lucas because it seems to me that if, as the High Court teaches in Witham v Holloway, all contempts are essentially criminal in their nature, it would be contrary to established principle that a person could be liable for a contempt even if that person was not a party to that conduct in the sense that that person had neither aided, abetted, counselled nor procured the offence, nor had been knowingly concerned in its commission, nor was a party to, nor had conspired with others to effect the contempt.

24                  As for the liability of directors of a company, the learned authors of Borrie & Lowe’s The Law of Contempt 3^rd ed. say at 571:

“…the current position seems to be that no action can be taken against a director or officer personally for breach of an order against a company, unless (a) the director knows of the order, and (b) he either actively assisted in the breach or wilfully failed to take steps to ensure that the order was obeyed.”

25                  The conclusion against importing vicarious liability to a principal for the principal’s solicitor’s contempt derives support from a consideration of the underlying rationale for the exercise of the contempt power referred to by Gibbs CJ, Mason, Wilson and Deane JJ in AMIEU v Mudginberri Station Pty Ltd, earlier set out.  If every exercise of the contempt power is because of the necessity to uphold and protect the effective administration of justice, that purpose is not advanced where an innocent person is found to be in contempt and ordered to pay costs and to indemnify other parties in respect of costs that they are ordered to pay.  On the contrary, such treatment would not uphold and protect the effective administration of justice: it would bring it into disrepute.

26                  The conclusion that I have reached, in my opinion, is not in conflict with the judgment in Heatons Transport (St Helens) Ltd v Transport and General Workers’ Union [1973] AC 15 and In Re: Supply of Ready Mixed Concrete (No 2) [1995] 1 AC 456.  Consistent with the notions of criminal responsibility of a corporation as described in cases such as Tesco Supermarkets Ltd v Nattrass [1972] AC 153, the shop stewards in Heatons Case, though not employees of the union, were for practical purposes, “the union” or, colloquially, part of the union and regarded by the union as such.  Lord Wilberforce at 111 said:

“The effect of [the] evidence is summarised in the statement made by the general secretary on television already quoted: ‘We don’t call on shop stewards to obey the union - they are the union.’ ”

27                  It is also important, in my view, to have regard to the orders in respect of which the National Industrial Relations Court held the union to be in contempt.  In the summary of opinion given by Lord Wilberforce, the following appears at 113:

“As soon as orders of the National Industrial Relations Court were issued restraining the union itself or by its officers, servants, and agents from continuing such practice, the union became responsible for taking all possible steps to stop the blacking, including the unequivocal withdrawal of the shop stewards’ authority and, if necessary, disciplinary action.”

28                  In my respectful opinion, Heatons Transport is no authority for the general proposition that an innocent principal is vicariously liable for the conduct of the principal’s agent, where that conduct is in contempt of court.

29                  In the Ready Mixed Concrete Case, the House of Lords concluded that the employees’ actions in breach of a court order amounted to contempt by the corporation.  Lord Templeman said at 465:

“An employee who acts for the company within the scope of his employment is the company.  Directors may give instructions, top management may exhort, middle management may question and workers may listen attentively.  But if a worker makes a defective product or a lower manager accepts or rejects an order, he is the company.”

30                  It may be that the holding in the Ready Mixed Concrete Case that acts of an employee are, for purposes akin to determining criminal liability, the acts of the corporation, is inconsistent with the concept of criminal responsibility of a corporation discussed in the Tesco Supermarket Case.

31                  In Tesco, Lord Morris of Borth-y-Gest referred at 176 to the judgment of Viscount Reading CJ in Mousell Brothers Ltd v London and North-Western Pacific Railway Co [1917] 2 KB 836 where Viscount Reading said at 844:

“Prima facie, then, a master is not to be made criminally responsible for the acts of his servant to which the master is not a party.  But it may be the intention of the legislature, in order to guard against the happening of the forbidden thing, to impose a liability upon a principal even though he does not know of, and is not a party to, the forbidden act done by his servant.  Many statutes are passed with this object.”

At 179 Lord Morris of Borth-y-Gest said:

“…it is important to remember that it is the criminal liability of the company itself that is being considered.  In general criminal liability only results from personal fault.  We do not punish people in criminal courts for the misdeeds of others.  The principle of respondeat superior is applicable in our civil courts but not generally in our criminal courts.  So the sole issue in the present case is whether ‘the company’ took all reasonable precautions and exercised all due diligence.”

And later at 179-180 said:

“How, then, does a company act?  When is some act the act of the company as opposed to the act of a servant or agent of the company (for which, if done within the scope of employment, the company will be civilly answerable)?  In Lennard’s Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915] AC 705 Viscount Haldane LC said, at p 713:

‘My Lords, a corporation is an abstraction.  It has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who for some purposes may be called an agent, but who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation.  That person may be under the direction of the shareholders in general meeting; that person may be the board of directors itself, or it may be, and in some companies it is so, that that person has an authority co-ordinate with the board of directors given to him under the articles of association, and is appointed by the general meeting of the company, and can only be removed by the general meeting of the company.’ ”

32                  Viscount Dilhorne at 187 in Tesco referred to the observations of Denning LJ in H L Bolton (Engineering) Co Ltd v T J Graham & Sons Ltd [1957] 1 QB 159 at 172:

“   ‘A company may in many ways be likened to a human body.  It has a brain and nerve centre which controls what it does.  It also has hands which hold the tools and act in accordance with directions from the centre.  Some of the people in the company are mere servants and agents who are nothing more than hands to do the work and cannot be said to represent the mind or will.  Others are directors and managers who represent the directing mind and will of the company, and control what it does.  The state of mind of these managers is the state of mind of the company and is treated by the law as such.’

If, when Denning LJ referred to directors and managers representing the directing mind and will of the company, he meant, as I think he did, those who constitute the directing mind and will, I agree with his approach.”

33                  Here there is, of course, no employer/employee relationship and there is no case which suggests that acts of an independent contractor engaged by a corporation can, without more, generate criminal liability in the corporation for those acts.

34                  For the above reasons, in my opinion, the appeal should be allowed.

35                  The orders of Carr J of 25 June 1998 that:

·        Forestview Nominees Pty Ltd and Silkchime Pty Ltd pay the costs of Perron Investments Pty Ltd and Belmont Forum Shopping Centre Pty Ltd, to be taxed on the basis of all reasonable costs incurred in relation to the notice of motion before Carr J; and

·        Perron Investments Pty Ltd and Belmont Forum Shopping Centre Pty Ltd be indemnified by the applicants in respect of the costs of Mr Carey in relation to the notice of motion, which costs are to be paid on the basis that all reasonable costs incurred in relation to the notice of motion before Carr J be paid,

should be set aside.

36                  The respondents, Perron Investments Pty Ltd and Belmont Forum Shopping Centre Pty Ltd, should pay the first and second appellants’ costs of the appeal and of the motion before Carr J.

Associate:

Dated:         13 April 1999

On appeal from a single judge of the Federal Court of Australia

REASONS FOR JUDGMENT

COOPER J

37                  The appellants and their solicitor were found guilty of civil contempt of court by Carr J on 25 June 1998.  The contempt proceedings were brought by the respondents to the appeal.  The respondents are not parties to the principal proceeding WAG92 of 1998 which was initiated by the appellants.

38                  As part of the conduct of the principal proceeding the appellants, by their solicitor, caused subpoenas to be served on the respondents requiring the production to the court of their business records.  The records were commercially sensitive and conditions to preserve their confidentiality were attached to the orders granting access to the documents.

39                  The solicitor for the appellants did not comply with the conditions before making the documents available to potential expert witnesses for use by them in the preparation of the appellants’ case.  The disclosure, contrary to the terms of the order, was due to oversight and occurred without the knowledge of the appellants.

40                  The solicitor did not defend the contempt proceedings.  He admitted his error, apologised to the court and to the respondents, and submitted himself to such orders as the court should make on the motion.  The appellants defended the proceedings.  They argued that the confidentiality orders were directed to the solicitor and not to them;  that they were not identified in the statement of charge which directed itself to the conduct of the solicitor;  and that as they had no knowledge of the matters complained of, any omissions, so far as they were concerned, were casual, accidental or unintentional.

41                  His Honour rejected each of the arguments of the appellants.  He found that the conduct amounted to a civil contempt of court by both the solicitor and the appellants.  The solicitor, his Honour found, was acting within the actual authority conferred on him by the appellants when he acted contrary to the terms of the order and made the subpoenaed documents available.  In those circumstances his Honour concluded that the acts and omissions of the solicitor constituted acts or omissions of the appellants.

42                  His Honour did not record a conviction against the solicitor or the appellants.  However, he ordered that they pay the respondent’s costs of the contempt proceedings and indemnify them in respect of costs awarded against the respondents in favour of a Mr Carey, a director of each of the appellants.  His Honour made other consequential orders.  The appellants appealed against the cost and indemnity orders and seek in lieu that the notice of motion for contempt be dismissed as against them and that the respondents pay the appellants’ costs of the appeal and below.

43                  The grounds of appeal are that his Honour erred in law, in :-

(a)        holding the appellants liable for the civil contempt committed by their solicitor;

(b)        holding that the appellants’ solicitor was acting within the actual authority conferred upon him by the appellants;

(c)        holding the act of contempt committed by the solicitor for the appellants constituted acts of the appellants.

44                  The appellants submit that to constitute contempt it must be shown that they themselves failed to comply with the conditions attaching to the order:  Re Modern Woodcraft Pty Limited (in liquidation) (1997) 75 FCR 245 at 253;  and, that their failure was a deliberate act on their part:  Swan Brewery Co Pty Ltd v Newman & Gwilyn (unreported, Supreme Court of Western Australia, COR 191 of 1998, 2 September 1998, per Murray J at 10, 17).  Because contempt proceedings are realistically to be seen as criminal in nature (Witham v Holloway (1995) 183 CLR 525 at 530), the appellants submit that it was necessary to prove beyond reasonable doubt a non-compliance with the order by the applicants which was wilful:  AMIEU v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 108 - 109, 112;  Witham v Holloway at 530.  The element of wilfulness could not be made out against the appellants, they submit, when they knew nothing of the events leading to non-compliance:  Hayden v Ditford (1988) unreported Court of Appeal (NSW) 11 November 1988 at 10 - 11.

45                  Finally, the appellants submit that they cannot be vicariously liable for contempt of court for the conduct of their solicitor.  In any event, they submit, absent knowledge and specific authorisation of the conduct, the solicitor’s retainer does not authorise the solicitor to perform acts which violate court orders.

46                  The issue for determination is a narrow one.  It is to decide whether or not the rules for the attribution of conduct under the law of civil contempt allow, in the circumstances of this case, the conduct of the solicitor to be attributed to the appellants so that the appellants have breached the order by the act and omission of their solicitor.

47                  Where the doing of an act is prohibited by a court order or, if permitted, is required to be performed in a particular manner, a person or body corporate bound by the order commits a breach of the order if he or it does the act or does it in other than the permitted manner.  The act need not be done personally;  it may be done by an agent or servant of the person or body corporate even though the act be done through carelessness, neglect or in dereliction of duty:  Rantzen v Rothschild (1865) 14 WR 96;  13 Law Times 399;  Stancomb v Trowbridge Urban Council [1910] 2 Ch 190 at 194;  Heaton’s Transport (St Helens) Ltd v Transport and General Workers’ Union [1973] AC 15 (HL) at 99 - 100, 109 - 110;  Director of Fair Trading v Pioneer Concrete (UK) Ltd [1995] 1 AC 457 (HL) at 476 - 481;  AMIEU v Mudginberri Station Pty Ltd at 112.

48                  Because the liability for contempt does not require any direct intention on the part of a principal or master to disobey the order, it is sufficient that the wilful and deliberate act in contravention of the order be that of the agent or servant done on behalf of the principal or master.  In those circumstances the principal may be found to have disobeyed the court order by its agent or servant:  Director of Fair Trading v Pioneer Concrete at 481.  The fact that the principal or master is unaware of the conduct of the agent or servant in contravention of the order or gave directions not to do the act is irrelevant for the purpose of liability for civil contempt of court.  If the conduct of the agent or servant is wilful and beyond conduct which is casual or accidental and unintentional, breach of the order by the conduct will constitute contempt of court by the principal or master.  This follows from the decisions in Rantzen v Rothschild and Director of Fair Trading v Pioneer Concrete.

49                  The authorities establish that a servant or agent acting as such may, by deliberate conduct, make the master or principal liable for disobeying court orders and therefore guilty of civil contempt of court.

50                  In the present case, Carr J found that the conduct of the solicitor was not casual or accidental and unintentional in the sense that term is used in the authorities and there is no appeal against this finding.  His Honour was also correct to treat the conduct as constituting civil contempt, the distinction between civil and criminal contempt not having been abolished by the decision in Witham v Holloway.

51                  The only question remaining in this appeal is whether or not the solicitor was acting as agent of the appellants when he breached the terms of the confidentiality order?

52                  In Prestwich v Poley (1865) 18 CB (NS) 805, Montague Smith J said (at 816):

“The attorney is the general agent of the client in all matters which may reasonably be expected to arise for decision in this cause.”

That statement has been consistently applied as correctly stating the position of a solicitor as agent for the client in the conduct of litigation:  Re Newen;  Carruthers v Newen [1903] 1 Ch 812 at 818;  Griffiths v Evans [1953] 1 WLR 1424 (CA) at 1431;  Great Atlantic Insurance Co v Home Insurance Co [1981] 1 WLR 529 (CA) at 539;  Waugh v HB Clifford & Sons Ltd [1982] 1 Ch 374 (CA) at 385 - 386, 387;  Spedley Securities Ltd v Bank of New Zealand (1991) 26 NSWLR 711 at 729 - 730.

53                  A solicitor, by virtue of the retainer to conduct the litigation for the client, has actual authority to do all things necessary and proper for the conduct of the litigation and need not refer questions arising in interlocutory matters to the client for specific instructions:  Ex parte Maxwell;  Re a Bill of Costs (1955) 72 WN (NSW) 333 (FC) at 336.

54                  An incorrect decision made by a solicitor in the conduct of litigation does not mean the decision made was not authorised by the retainer or that it was not necessary or proper in the conduct of the litigation to make the decision and to give effect to it. 

55                  The question of whether to deliver copies of the confidential documents to experts to obtain their opinion for possible use in the litigation and what steps were necessary to comply with the conditions attaching to the orders granting access to them, were clearly matters which might reasonably be expected to arise for decision in the case.  The decisions made and the conduct to give effect to them were acts done by the solicitor on behalf of the appellants in the conduct of the litigation. The actions of the solicitor were within the authority granted to him by the appellants under the retainer.  He was at the relevant time acting as agent for the appellants and his acts and omissions were attributable to the appellants for the purposes of the rules relating to civil contempt.  The fact that the conduct was in breach of the order does not take the conduct outside the authority which flows from the retainer;  nor does it relieve the appellants from the consequence of it.

56                  For the above reasons I am not persuaded that Carr J made any error in law as contended by the appellants in their grounds of appeal.  I would dismiss the appeal with costs.

Associate:

Dated:    13 April 1999

On appeal from a single judge of the Federal Court of Australia

REASONS FOR JUDGMENT

57                  R D NICHOLSON J:  This appeal raises the single but important issue of whether a principal should be liable for actions of the principal’s solicitor taken in contempt of court.  The primary judge found the principals liable for such acts of their solicitor.  The appellants appeal against that decision.

58                  The issue arose in the following circumstances, as the reasons of the primary judge recount. 

59                  The appellants sought relief in relation to a restrictive covenant registered over certain land which one of the appellants owns and the other had previously owned.  The restrictive covenant was in terms which prevented the use of certain land retained by one of the appellants for development of a shopping centre.  One aspect of the case was appealed to the High Court of Australia where the enforceability of the restrictive covenant was upheld.  There remained to be decided the issue whether the restrictive covenant is void or unenforceable by reason of provisions of the Trade Practices Act 1974 (Cth) or as a matter of public policy under town planning legislation.   In relation to the former it became necessary, for the disposition of arguments relating to competition made in relation to s 45B of that Act, to define a relevant market in which the purpose or effect of the restrictive covenant should be assessed and, in particular, whether such market had the purpose or effect of substantially lessening competition.

60                  For this purpose the appellants engaged in the process of issuing subpoenas to the proprietors of what were regarded as comparable shopping centres in the relevant market.  The subpoenas were directed to establishing the proposition that the respondent, as the proprietor of the neighbouring shopping centre, was in a position to charge more by way of rentals because of its market power in that relevant market.  The subpoenas gave rise to issues of confidentiality.  Orders were formulated to protect highly sensitive information from falling into the hands of competitors of the recipients of the subpoenas.

61                  The issue which arises again for decision on this appeal came before the Court as a consequence of a notice of motion brought by Perron Investments Pty Ltd and Belmont Forum Shopping Centre Pty Ltd (“the moving parties”) who were proprietors of other shopping centres said to be operating in the relevant market and thus the recipients of subpoenas.

62                  On 26 September 1997 the Court made confidentiality orders in respect of documents produced in accordance with subpoenas addressed to the moving parties.  The orders were to the effect that:

“1.       The documents… be kept confidential and in particular:

(a)               Access to the documents shall be limited to the legal representatives of the Appellants and the Respondent and one or more nominated expert witnesses.”

Various safeguards were built into the order, two of which are relevant to this appeal.  The first was that “not less than fourteen days prior to disclosure to any expert witness, the party seeking such disclosure shall in writing advise the relevant recipient’s solicitors of the name or names of any such expert to whom disclosure is proposed”.  The primary judge accepted that it was the intent of this aspect of the order that if either of the moving parties, having been provided with that information, recognised the name as that of someone being a competitor in the relevant market, then that party had fourteen days in which to object.

63                  The second safeguard was that “before any expert witness is given access to or copies of any of the documents he shall be handed a copy of this order and shall in writing acknowledge of that copy and undertake to abide by the terms of this order”.

64                  In unintentional breach of these orders, a solicitor in the firm of solicitors representing the appellants sent documents provided by the moving parties to a Mr Wilson, a consultant in the property industry.  The moving parties took objection to this occurrence.  As a consequence the moving parties brought a motion seeking orders that the appellants and/or a Mr Carey, a director of the appellants, and/or the solicitor in the firm of solicitors acting for the appellants, be fined or punished for contempt of the Court in failing to comply with the orders.  As required by O 40 r 6 of the Federal Court Rules, the moving parties filed a statement of charge alleging that, in breach of par 1(a) of the orders made on 26 September 1997, the solicitor on behalf of the appellants disclosed information contained in the documents to certain persons including Mr Wilson without first disclosing to the solicitors for the moving parties the names of the experts and further, in breach of par 1(b) of the orders, failed to obtain the acknowledgment provided for in that paragraph.

65                  On becoming aware of his omission, the solicitor freely acknowledged the same and took steps to obtain immediate compliance with the orders even though the documents had been made available.  He apologised and did not defend the proceedings brought against him.

Reasons of primary judge

66                  The motion and charges were contested by the appellants.  The primary judge dealt with the principal grounds on which that opposition was based.  The first was that it was said the only person to whom the orders were addressed were the appellants’ solicitors, so that it could not be said the orders were addressed to the appellants.  This submission was rejected by the primary judge on the ground that the orders were not confined to the categories of persons to whom they are addressed and that he took it they were addressed to the whole world, including the appellants.  Additionally, he considered there were other parts of the orders which contained a  fair indication they were intended to be addressed to the appellants.

67                  Secondly, it was submitted that the statement of charge did not identify the appellants as being charged with the contempts.  The primary judge found the appellants had been sufficiently identified.  He said that in par 1 of the statement of charge the solicitor is described as acting on behalf of the appellants and in respect of the omissions which formed the subject of the charge the solicitor was described as acting on behalf of the appellants.  Similarly in the motion there was a reference to the appellants.

68                  In the course of making this finding, his Honour held that the contempts were in the category of civil contempts.

69                  Thirdly, it was submitted that the appellants could not be held to be in contempt when they had no knowledge of the omission and the omissions were, so far as they were concerned, casual, accidental or unintentional.  It was said for the appellants a distinction could be drawn between the circumstances before the House of Lords in Heatons Transport (St Helens) Ltd v T G W U and Ors [1973] AC 15 and the present circumstances.  The primary judge rejected this submission.  He said that the omissions forming the focus of the motion did not fall within the description “casual, accidental or unintentional” in the sense those terms were used in the decided cases.  Furthermore, he considered that the solicitor was acting within the actual authority conferred upon him by the appellants.  He therefore concluded that what the solicitor did constituted acts or omissions on the part of the appellants.

70                  The primary judge declined to record any convictions.  Turning to the issue of remedies, he ordered, firstly, that the appellants and the solicitor pay the moving parties’ costs of the motion; secondly, the motion against the director be dismissed; thirdly, the appellants file and serve an affidavit verifying that no information from any documents produced by the moving parties had been disclosed to or obtained by the appellants, their directors or employees, and, fourthly, that the moving parties have liberty to apply in the event the deponent was not the director; fifthly, an order of prohibition on the appellants calling Mr Wilson to give any evidence on information obtained from the documents produced by the moving parties; sixthly, an order that the moving parties pay the costs of the direction in relation to the motion and that they be indemnified by the appellants and the solicitor in respects of those costs.

Grounds of appeal

71                  The appellants bring three grounds of appeal.  They contend the primary judge erred in law in holding the appellants’ liable for civil contempt; in further holding the appellants’ solicitor was acting within the actual authority conferred upon him by the appellants when he committed the contempt; and in holding the acts of contempt committed by the solicitor constituted an act of the appellants.

Character of the contempt

72                  For the appellants it is contended that the primary judge was in error in characterising the contempt as civil.  For the moving parties it is not accepted that the contempt in issue is criminal although it is accepted that, as a civil contempt, it is serious and required proof beyond reasonable doubt, although no proof of actual intent would be thereby required.

73                  The relevance of the issue of characterisation here is that to determine whether the actions of the solicitor properly attach a liability upon the appellants it will be relevant to take into account whether the liability is criminal in character.  It is common ground that the appellants were unaware of the conduct of the solicitor and did not ratify, aid or abet it.

74                  In Australasian Meat Industry Employees’ Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 107-109 the High Court said (at 109):

“There is …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.”

In Witham v Holloway (1995) 183 CLR 525 the majority of the High Court accepted the view expressed by Deane J in Hinch v Attorney‑General (Vic) (1987) 164 CLR 15 at 49 that all proceedings for contempt “must realistically be seen as criminal in nature”.  Consequently, the majority (at 534) together with McHugh J (at 535 and 548) held that all charges of contempt must be proved beyond reasonable doubt.  McHugh J (at 549) considered it open to the Court in discharge of its duty to rationalise the principles of the common law to abolish the distinction between civil and criminal contempts, although he did not consider that step was necessary for resolution of the issue in Witham.  The ratio decidendi of Witham was not that contempt proceedings are criminal in nature; rather it was that contempt proceedings, whether criminal, quasi‑criminal or civil in nature, require the application of the standard of proof beyond reasonable doubt.

75                  In Witham at 530 the majority of the High Court said, on the authority of Mudginberri at 108:

“In general terms, the distinction between civil and criminal contempt is that a civil contempt involves disobedience to a court order or breach of an undertaking in civil proceedings, whereas a criminal contempt is committed either when there is a contempt in the face of the court or there is an interference with the course of justice.  However, disobedience or breach of an undertaking amounts to a criminal contempt if it involves deliberate defiance or, as it is sometimes said, if it is contumacious.

In that passage in Witham the High Court noted that it had been held that breach of a court order by a solicitor (as well as a liquidator) is also a criminal contempt.  The authority cited for that was In Re Freston (1883) 11 QBD 545.  In Mudginberri at 107‑108 the majority of the Court noted that contempts by officers of the court and others having a special relationship with the court, such as solicitors and liquidators, were instances of criminal contempt.  They said that these instances “may be explained on the footing that they involved disciplinary action against officers of the court” (at 108).  In respect of solicitors they cited Seldon v Wilde [1911] 1 KB 701.

76                  The facts in Freston were as follows.  Freston was a solicitor of the Supreme Court.  A Master ordered that he deliver up certain documents, pay a certain sum and pay costs.  The sum and the costs remaining unpaid, a writ of attachment was issued under which Freston was ultimately arrested.  A summons was issued to discharge him from custody on the ground that at the time of his arrest he was privileged as an advocate.  It was accepted by the Court of Appeal that the process to enforce civil obligations was subject to privilege but process for acts in the nature of offences was not.  The question therefore was whether, if a solicitor disobeys an order made on him in his character as a solicitor, he commits an offence and become subject to criminal process or whether he is merely subject to civil process.  Brett MR concluded that “the statutes go a very long way to shew that a default by a solicitor is an act of a criminal nature, for which he may be punished as for a contempt.  The contempt of … Freston was in the nature of an offence, and no privilege can be claimed on his behalf; for attachment is a mode of curing or punishing an offence” (at 555).  Lindley LJ (at 556) was of the same opinion.  Fry LJ also accepted that the attachment was punitive or disciplinary “for the Court was proceeding against its own officer” (at 557).  He distinguished the case from Cobham v Dalton Law Rep 10 Ch 655 on the ground “the attachment was not against a solicitor in his capacity as officer of the court but against a party to the proceedings in the Court of Chancery.”

77                  Before Seldon came before the Court of Appeal the same court had decided In Re Hardwick [1883] 12 QBD 148.  It was there held that if upon proceedings taken against a solicitor the court strikes the solicitor off the roll, it is not exercising jurisdiction in a criminal cause or matter.  The dilemma thus presented to the Court of Appeal in Seldon was that if the court made a lesser order, namely, that the solicitor do a particular act such as delivery up of documents and ordered attachment for disobedience, the court was exercising jurisdiction in a criminal cause or matter.

78                  In Seldon there was a court order requiring a solicitor to pay to a plaintiff the costs of a motion by the plaintiff for the attachment of the defendant for contempt of court in not having delivered to the plaintiff a bill of costs pursuant to an order for taxation of costs.  The issue was whether the order was or was not made in a criminal or quasi‑criminal matter so that the plaintiff could sue the defendant to recover the amount.  Inasmuch as the facts in Seldon involved disobedience by a solicitor to an order of court made against him as an officer of a court the Court of Appeal was required to address the decision in Freston.  Buckley LJ sought to distinguish the decision in Freston on the ground that the issue there was not whether the process was criminal or quasi‑criminal but whether it was merely civil so that the ratio decidendi of the case was that “privilege extends to protect from attachment in that which is simply in the nature of civil process, but does not extend to protect from attachment which is punitive or disciplinary” (at 706).  Kennedy LJ distinguished Freston on the further ground that where, as there, the order for attachment has been made under which the solicitor may be imprisoned and cannot claim release ex debito justitiae upon doing the acts commanded, the disciplinary processes cease to be merely civil and have so far acquired a criminal nature that a civil action, based upon part of the order of attachment, cannot be maintained by the party to whom money, in the shape of costs or otherwise, has become payable under that order.  His view was that until that stage is reached, proceedings against a solicitor, whether to strike the solicitor off the rolls or order the solicitor to deliver a bill of costs, although truly of a disciplinary character, remain essentially a civil proceeding (at 711‑712).  Vaughan Williams LJ dissented on the ground that the principle in Freston applies whenever the offence is criminal or quasi‑criminal (at 713).  At 714 he said “this means, I think, that, as the process of attachment in this case was a process for the punishment of an offence and not process to enforce a judgment upon a civil dispute between the parties, it must be regarded as punishment of the solicitor awarded under the peculiar disciplinary power of the Court over its officers for breach of duty”.  The result was that (at 715) not every disciplinary order is of necessity an order made in respect of a criminal offence.  He could not agree with the reasoning of Kennedy LJ that attachment provided the point of distinction because he considered that the order for payment of costs was part of the punitive order and he could not therefore differentiate it from a case in which attachment is ordered (at 716).

79                  While the decision in Seldon is not to the effect the passage in Mudginberri (at 107) might suggest, it is the case that the High Court has accepted the decision in Freston.  The reasoning of Vaughan Williams LJ in dissent is consistent with the acceptance by the High Court in Mudginberri (at 107-108) that the instances of criminal contempt may be explained on the footing that they involve disciplinary action against officers of the court.  In effect, that was also the view of Kennedy LJ, although he would have confined the notion to one arising from attachment.  It follows in my view, that if the orders of Court are punitive in character involving disciplinary action against officers of the Court, any related contempt proceedings will be criminal or quasi‑criminal in character.

80                  The relevant orders here are those made on 26 September 1997 in respect of which the breach occurred.  They were not orders directed to the solicitor as a matter of disciplinary action concerning him as an officer of the court.  Rather they were orders, so far as they were applicable to the solicitor, prescribing certain requirements for confidentiality in relation to documents in the action.  I therefore consider that the primary judge was not in error in characterising the contempt as civil.

81                  The characterisation of the contempt is not here relevant to any issue of proof.  Witham dictates a standard of proof beyond reasonable doubt in both civil and criminal or quasi‑criminal contempts.  In any event, as a result of admissions here, there were no questions of proof in issue before the primary judge.

Lack of knowledge

82                  For the appellants it is contended that a contempt, a fortiori a criminal contempt, can only be punished if committed “wilfully”.  It is submitted that while this does not require wilful defiance, the quality of “wilfulness” cannot be present when the party charged knew nothing of the events amounting to the non-compliance.  For the appellants reliance is also placed upon the acceptance in Hayden v Ditford (Kirby P, Hope and Clarke JJ, Supreme Court of New South Wales Court of Appeal, unreported, 11 November 1988) that the lack of knowledge by a Minister of the service of a subpoena of an officer of his Department made it virtually impossible for him to be guilty of “wilful disobedience” to a subpoena addressed to that officer.

83                  In Mudginberri at 113 the High Court concluded “that a deliberate commission or omission which is in breach of an injunctive order or an undertaking will constitute such wilful disobedience unless it be casual, accidental or unintentional”.  The “wilful disobedience” to which the court referred was in relation to a contempt involving the same so that the court had a “very substantial purpose of disciplining the defendant and vindicating the authority of the court”.  In so deciding the High Court noted (at 112) that the House of Lords in Heatons at 109 had accepted the correctness of the approach in In Re Mileage Conference Group of the Tyre Manufacturers’ Conference Ltd’s Agreement [1966] 1 WLR 1137 and Stancomb v Trowbridge Urban District Council [1910] 2 Ch 190 at 194.  In the latter reference it was stated by Warrington J that it would suffice that the relevant act or omission was wilful even if, in a case where the breach was constituted by an act or failure to act by a servant or agent, the act or omission of the servant or agent was “through carelessness, neglect, or even in dereliction of his duty”.  Although the word “wilfully” used in early English cases derived from O XLII, r 31 of the Rules of the Supreme Court 1883, the concept of wilful or intentional or deliberate commission or omission has continued.

84                  There is in this passage an apparent dichotomy between that which was decided by the High Court and the dicta of Warrington J in Stancomb so far as it applies to a servant or agent.  The High Court appears to accept that casual, accidental or unintentional omission will not constitute a breach of an injunctive order or an undertaking although where a servant or agent acts through carelessness, neglect or dereliction of duty, the omission will qualify as wilful.  There is therefore support for both the submissions for the appellants and the countervailing submission for the respondent on the point.

85                  However, examination of the authorities upon which the passage in Mudginberri at 113 is based, including Fairclough & Sons v Manchester Ship Canal Co (No 2) (1897) 41 Sol Jo 225, makes it apparent that the significance of a disobedience being casual, accidental or unintentional is that it will not be punished in the same way as a wilful disobedience.  It will nonetheless constitute a disobedience so that mens rea is not intended by the passage to be a pre‑condition of the element of disobedience.  See Heatons and generally Borrie and Lowe, The Law of Contempt, (Butterworths, 3^rd ed 1996) 567-579.  It follows that it cannot therefore assist the appellants that they lacked an intention to breach the order.

86                  There is a further aspect to the facts of this case relating to intention.  Counsel for the moving parties contended that the appellants when requested to do so declined to put on an affidavit that they lacked knowledge of the actions of the solicitor.  Accordingly, it was contended for them that they were entitled to assert the appellants were not innocent.  However, before the commencement of the action the solicitor had admitted the fault and stated that his clients were innocent.  This was the primary evidentiary position facing the respondent.  The respondent bore the onus and there was no reason to go behind the primary evidentiary position.  No inference adverse to the appellants could be drawn from the fact they did not file an affidavit in the terms sought by the respondent.

Liability of principal for acts of solicitor

87                  It is useful to have regard to the conceptual areas relevant to this issue.  The relationship between a principal and a solicitor potentially attracts both the application of the law of agency as well as the tortious law of vicarious liability.  It may also attract the application of contract law and of statutory provisions.  It also raises the question whether a solicitor, as an officer of the court, is subject to the application of any branch of the law on the same basis as others who are not officers of the Court.

88                  Vicarious liability arising in tort has the consequence that if a servant commits a tort in the course of his employment, the employer is liable regardless of whether he himself has committed a tort:  “every act which is done by a servant in the course of his duty is regarded as done by his master’s orders, and consequently is the same as if it were the master’s own act…”:  Bartonshill Coal Co v McGuire (1858) 3 Macq 300 at 306.  There is no such liability in the case of an independent contractor:  see generally R P Balkin and J L R Davis, Law of Torts (Butterworths, 1991) pp 791-798.

89                  There may be cases where vicarious liability can also arise where the status of an employee is irrelevant.  F Trindade and P Cane, The Law of Torts in Australia (Oxford University Press, 1993) pp 708‑714 list categories of strict liability, employers’ duties, occupiers hospitals, bailees, property developers, public authorities and dangerous activities as areas within such cases can arise.  As is pointed out in that text (at 715) the concept of an agent in the law of tort, where it is used to indicate one person acting with the authority of another so that the agent may be either a servant or an independent contractor or neither, overlaps with the concepts relevant to the determination of vicarious liability.  The basic rule there stated is that where the liability is sought to be attached to an employer, the notion of agency is useful only if the act was outside the scope of the servant’s employment.  Where the liability is sought to be attached to an independent contractor, the notion of agency might be used to create exceptions to the basic rule of no liability:  see Trindade and Cane at 715.  Balkin and Davis at 798, however, contend that the category of agent has no relevance in the context of vicarious liability and that the law of torts is concerned only to know in any particular case whether or not the person seeking to fix the liability on another is a servant, although the authors accept that the tort of deceit affords an important exception.

90                  In Colonial Mutual Life Assurance Society Ltd v The Producers and Citizens Co‑operative Insurance Co of Australia Ltd (1931) 46 CLR 41 the High Court by majority held that a canvasser and agent under an agreement who had made defamatory statements concerning another assurance company had acted as a representative of the appellant company so that that company should be considered as conducting the negotiations in person and was liable for the slanders uttered by the agent.  Dixon J at 48 accepted that in most cases in which a tort is committed in the course of the performance of work for the benefit of another person, that person cannot be vicariously responsible if the actual tortfeasor is not his servant and he has not directly authorised the doing of the act which amounts to a tort.  However he continued (at 48‑49):

“But a difficulty arises when the function entrusted is that of representing the person who requests its performance in a transaction with others, so that the very service to be performed consists in standing in his place and assuming to act in his right and not in an independent capacity.  In this very case the “agent” has authority to obtain proposals for and on behalf of the appellant;… but I think that in performing these services for the Company, he does not act independently, but as a representative of the Company, which accordingly must be considered as itself conducting the negotiation in his person.  The rule which imposes liability upon a master for the wrongs of his servant committed in the course of his employment is commonly regarded as part of the law of agency:  indeed, in our case-law the terms principal and agent are employed more often than not although the matter in hand arises upon the relation of master and servant.  But there is, I believe, no case which distinctly decides that a principal is liable generally for wrongful acts which he did not directly authorize, committed in the course of carrying out his agency by an agent who is not the principal servant or partner, except, perhaps, in some special relations, such as solicitor and client, and then within limitations.”  (Emphasis added).

It is against this background that the submissions for the parties require consideration.

91                  For the appellants it is submitted that it has been suggested in a decision of this Court that a solicitor’s acts, omissions or state of mind cannot be attributed to the solicitor’s client so as to amount to contempt:  Re Modern Wood Craft Pty Ltd (In Liquidation) (1997) 75 FCR 245 at 253.  In that case the liquidator of a company sought a finding of contempt of the court by officers of the company in respect of their failure under the Corporations Law to file affidavits about the company’s examinable affairs within the period ordered.  This had occurred in circumstances where the officers had received legal advice that they were not obliged to file the affidavits.  Lindgren J at 253 stated that a finding of contempt was to be made in relation to the alleged contemnors themselves who must be shown to have failed to comply without reasonable excuse.  He did not think that for that purpose the conduct of the solicitors was to be attributed to the officers.  That point, however, is not developed by further reference to authority and was apparently not argued more fully.

92                  Support is also sought to be found for that view in The Swan Brewery Co Pty Ltd v Newman and Gwilym (unreported, Supreme Court of Western Australia, Murray J, 2 September 1998.)  That was a case relating to a liquidator and involved the application of the requisite standard of proof beyond reasonable doubt to the circumstances of the case.  I find it of no assistance to the resolution of this appeal.

93                  It is then said for the appellants that the approach taken by Lindgren J in Re Modern Wood Craft was consistent with decisions in which, absent the employer/employee relationship, the courts have refused to attribute the contempt of A to B where B is a party who has a legal relationship with A.  Cited in support is Hayden where the NSW Court of Appeal, as previously stated, did not consider the Minister was liable in respect of a subpoena of which he had no knowledge directed to the “proper officer”.

94                  For the appellants it is also said that the decision of the House of Lords in Heatons is not authority for the proposition that a solicitor’s omissions which breach the court’s orders are a contempt by the solicitor’s clients.  In Heatons it was held that shop stewards representing dock workers had implied authority to take industrial action so that the Industrial Court was fully entitled to conclude the union, through those stewards, had been guilty of an unfair industrial practice and to issue orders restraining its continuance.  In the course of his speech delivering the joint opinion of their Lordships, Lord Wilberforce said (at 99-100):

“No new development is involved in the law relating to the responsibility of a master or principal for the act of a servant or agent.  In each case the test to be applied is the same:  was the servant or agent acting on behalf of, and within the scope of the authority conferred by, the master or principal?  Hewitt v Bonvin [1940] 1 K.B. 188 and Launchbury v Morgans, post, p. 127.  Usually a servant, as compared with an agent, has a wider authority because his employment is more permanent and he has a larger range of duties as he may have to exercise discretion in dealing with a series of situations as they arise.  The agent in an ordinary case is engaged to perform a particular task on a particular occasion and has authority to do whatever is required for that purpose but has no general authority.

…

But there are cases in which an agent who is not a servant does have authority of considerable generality.  He may be elected or appointed to some office or post for a substantial period and he may have to perform acts of several classes on behalf of the principal and he may have to exercise a discretion in dealing with a series of situations as they arise.  The position of such an agent and the scope of his authority are very similar to those of a servant.

The question in this appeal is whether the respondents are liable for their shop stewards’ acts which constitute unfair industrial practices.  Liability for tortious acts is outside the scope of this appeal:  it may be a closely connected subject, but what is said here does not necessarily apply to it, because  it is not under consideration.”

I accept the further submissions for the appellants that Heatons case is not authority which assists here.  The shop stewards in Heatons were for practical purposes part of the union and taken to be under its control.  It was a case concerned with agents and not with servants.  But the same principle was applied by Lord Wilberforce at 99-100 to both.  It was on that basis held in the later case of Director-General of Fair Trading v Pioneer Concrete (UK) Ltd [1995] 1 AC 456 that disobedience to an injunction by the servants of a company, acting in the course of their employment, amounted to contempt of court by the employing company unless the conduct of the employees could be described as merely casual or accidental and unintentional. That Heatons and Pioneer Concrete considered the application of the relevant principles to corporations is confirmed for example by reference to Z Bank v D One & Ors [1994] 1 Lloyds Law Reports 656 at 661.

95                  For the appellants it is also contended that as a matter of legal policy there is no point in extending the law so as to impose liability for contempt upon a solicitor’s innocent principal.  It is sufficient, it is said, that the punishment or the ability to punish the defaulting solicitor vindicates the deponent’s rights as well as the Court’s authority.  Additionally, it is submitted that because a solicitor is subject to professional sanctions, the imposition of a sanction on an innocent client does nothing to avoid the risk of repetition of non-compliance by lawyers.

96                  The case for the appellants refers also to P S Atiyah “Vicarious Liability in the Law of Torts” (Butterworths, 1967) p 142 where the view is expressed that this type of vicarious liability is anomalous and ought not to be extended.  At 140 the author expresses the view that attempts to hold a client vicariously liable for the acts of his solicitor in different sorts of cases have rarely met with success.  The text is also a useful source of authorities relating to vicarious liability arising in respect of solicitors.

97                  For the moving parties it is contended that it would be hard on them to know what went on as between the solicitor and the clients.  Consequently it is submitted for them that there are sound reasons of legal policy why they should be able to hold the principals liable and not be put to an election.

98                  Furthermore, it is submitted that corporate parties can only act through a solicitor.  Consequently it is said the relationship between the corporation and the solicitor is akin to that recognised in Heatons and Pioneer Concrete in relation to corporations.  This submission is supported by reference to the finding of the primary judge that the confidentiality order was made as against the parties and not only against the solicitor.  I have already distinguished Heatons case.

99                  Heatons case brings with it particular difficulties due to the wide meaning given to the term agent – cf Colonial Mutual Life at 50 – and the unclear basis on which the law of agency applies in this field.  As recognised by Dixon J in Colonial Mutual at 49, solicitors stand in a special and particular relationship to their principal particularly because of the duties which they owe as an officer of the Court.  It is appropriate in my view, in the absence of some more general clarification of the application of the conceptual streams to which I have referred, to resolve this issue of the appeal, if possible, by reference to decided cases on vicarious liability and/or agency so far as it applies specifically in relation to solicitors.

100               Examination of the cases cited in Atiyah show the following, as the examination of the text itself makes apparent.  Liability by a client for the acts of a solicitor has been accepted from early times where the solicitor, in the course of issuing process on behalf of that client, has created a liability to a third party by reasoning of some illegality.  The reasons for judgement in Jarmain v Hooper (1843) 6 M & G 827 state the principles and some authorities in the following manner:

“As to the defendant Heenan, the only question in his case is, whether he is bound by the act of his attorney, in giving the directions to the sheriff to take the goods of the plaintiff. The attorney has the general conduct of the cause; he is the only person with whom the sheriff has communication:  and, in taking a step essentially necessary for the benefit of the client, that is, for the obtaining the fruit of his judgment, we think he cannot be held to have acted beyond his authority, though he has miscarried in its execution.  And, when it is argued that he cannot be his agent in giving false information, the answer is, that, if his agent to do the particular act, the client must stand to the consequences if he act inadvertently or ignorantly; as in Parsons v Lloyd (3 Wils, 341), where trespass was held maintainable against the client, for causing the plaintiff to be arrested under a writ which was afterwards set aside for irregularity.  It was argued, in that case, that suing out the writ was the immediate act of the attorney, that he had not been retained to sue out a void or an irregular writ, and that it was therefore not within the scope of his authority.  But it was answered by De Grey C.J., that “the act of the attorney is the act of his client;” and by Gould J., “the plaintiff should have employed a more skilful and diligent attorney; for the act of the attorney, in point of law, is the act of the party, his client”.  And see McManus v Crickett, 1 East, 106; Croft v Alison, 4 B. & Ald. 590; Gregory v Piper, 9 B. & C. 591, 4 Mann. & Ryl 500; Lyons v Martin, 8 A. & E. 512, 3 N. & P. 509; Attorney General v Siddon, 1 Tyrwh. 41, 1 C. & J. 220.”

In Collette v Foster (1857) 2 H & N 356 Baron Watson said:

“I have always understood, that where a party employs an attorney, and judgment is obtained and execution issued, and that execution set aside on the ground of irregularity, then the client is liable for any act of trespass under that process.  The writ is a justification to the officer but not to the party.  The attorney who has gone beyond his duty becomes responsible with his client.  An attorney is a peculiar kind of agent; in the Court he is put in the place and stead of the client, and is authorized to take proceedings on his behalf; but the client, who rarely knows what proceedings the attorney takes, is responsible.  This principle has been so long settled and laid down in the books that I do not wish it to be understood that I entertain the slightest doubt upon this subject.  …”

101               In Smith v Keal [1882] 9 QB D 340 the Court of Appeal distinguished Jarmain v Hooper on the ground that it was not within the scope of the implied authority of a solicitor of a judgment creditor issuing a fi fa to direct the sheriff to seize particular goods.  In the course of so doing however Jessel MR said:

“In the first place it is clear that on principle a man is liable for another’s tortious act if he expressly directs him to do it, or if he employs that other person as his agent, and the act complained of is within the scope of the agent’s authority.  I agree that the Court ought to be very careful how it extends the doctrine “respondent superior”.  It has been carried in our law very far indeed.  I think quite far enough.  If I had to enact a law upon the subject, I doubt whether I should carry it so far.  What we have to find out is what is the extent of the authority of a solicitor who is employed by a plaintiff in an action.  Now it is clear that it is no part of his duty to  interfere with the sheriff in the performance of his duty. …”

Atiyah at 140 states “it is still very questionable whether there is any such general principle as Jessel, M.R. here enunciated.”  Other cases, however, have treated the particular case of vicarious liability as not in question and accepted it as resting on the principle of agency:  Morris v Salberg [1889] 22 QB D 614; Lee v Rumilly (1891) 55 JP 519; Clissold v Cratchley [1910] 2 KB 244.  Reference to the judgment of Lord Esher MR in Morris v Salberg at 619 shows that both in that case and in Smith v Keal the Court of Appeal had declined to overrule Jarmain v Hooper.

102               The cases previously referred to have all addressed instances relating to the issue of legal process, although the references as to principle in them are more widely based.  Atiyah expresses the view (at 140) that “[a]ttempts to hold a client vicariously liable for the acts of his solicitor in different sorts of cases have rarely met with success”.  A number of decisions are referred to by him.

103               In Rhodes v Moules [1895] 1 Ch 236 the possibility was recognised that a client of a solicitor could be held liable for fraud.  Likewise he refers to Egginton v Lichfield Corporation (1855) 5 E & B 100 where client liability would exist when a solicitor is instructed to take criminal proceedings on the client’s behalf where the solicitor persists with the proceedings after facts have come to light showing them to be groundless.

104               More to the point is the decision in Burnes v Pennell (1849) 2 HL Cass 497.  The question which arose there was whether a company was bound by the communications of its law agent respecting its commercial affairs and commercial prosperity made during the course of negotiating a settlement.  It was held that the company was not so bound because the law agent was not acting within the scope of his authority from the directors.  As stated by Lord Campbell at 519‑520 “he was employed by them only as a lawyer, to demand and sue for a debt due from a shareholder; and he had no authority to make any disclosure respecting the concerns or the condition of the company to a stranger who contemplated the purchase of shares in the company”.

105               In contrast there are decisions involving instances where a trustee or executor has deposited moneys with a solicitor which the solicitor has misappropriated.  In those instances the general principles relating to breach of trust have been applied to determine the liability of a trustee or executor:  In re Sheppard [1911] 1 Ch 50; In re Vickery [1931] 1 Ch 572; Speight v Gaunt (1883) 9 App. Cas. 1; Re Mitchell (1884) 54 LJ Ch 342; Thorne v Heard and Marsh [1895] AC 495.

106               In the absence of any decisive authority on the point in issue on this appeal it is appropriate to cite the conclusion reached by Atiyah at 141.

“Is it possible to explain the basis on which a principal is held liable for torts committed by a solicitor in the light of the authorities so far mentioned?  As already indicated there are a number of different possibilities, several of which have already been referred to.  First, it is arguable that these cases are illustrations of a general principle of vicarious liability for agents, and undoubtedly there are many dicta such as those cited from Smith v Keal above which support this view.  Secondly, it is arguable that the cases merely illustrate the narrower proposition that a principal is liable for the consequences (including trespasses) of a statement which his agent makes on his behalf when acting within the scope of his authority.  Thirdly, it can be said that these cases are merely historical anomalies, and that no general conclusions can be drawn from them.  In Lee v Rumilly (1891), 55 J.P. 519, C.A. Kay, L.J., seems to suggest (at p. 519) a fourth possibility, namely that liability rests on a non-delegable duty, but this only explains the fi fa. cases.”

Atiyah examined the issue in 1967.  The Court has not been taken to any authorities of further assistance subsequent to that date nor have my researches disclosed such.

107               The precise point raised by the appeal does not appear to be presently the subject of binding authority.  The Court is therefore left to reason out the issue without applicable precedent but with regard to the range of authority previously referred to.  Approaching the matter in that light I consider the following to be the position on the issue at law:

1.                  A solicitor is an officer of the Court.

2.                  A solicitor is the agent of his or her principal.

3.                  The scope of the solicitor’s authority as an agent is to undertake those matters which flow from the retainer subject to limitations requiring special authority for certain expenses of pledging the principals credit:  Cordery’s Law Relating to Solicitors (Butterworths (8^th ed), 1988) p. 76-77.  The solicitor is authorised to act as his or her principal’s agent in all matters (not falling within an exception) which may reasonably be expected to arise for decision in the course of proceedings:  Cordery at 83.

4.                  Where a Court makes an order directed to the parties to preserve confidentiality of documents by requiring certain steps to be taken, the solicitor has the authority to act to ensure compliance with such order.

5.                  Where the order is made by a court the solicitor, as an officer of the court, is obliged to give effect to the terms of the order on behalf of the principals to whom the order is directed.

6.                  An omission by a solicitor to comply with such an order lies outside the scope of the authority given by the principal to the solicitor.  Alternatively there is an implied condition in the authority that the solicitor will act lawfully.

7.                  An omission is distinguishable from a step taken in excess of authority where the solicitor is generally authorised to act.

8.                  An omission by a solicitor to comply with an order of court in those circumstances being outside the authority of the retainer given by the principal cannot create a liability in the principal.  Furthermore, being contrary to the solicitor’s duty to the court, it attracts the discipline of the court and so does not lack sanction.

9.                  Such a conclusion is consistent with what was said by Dixon J in Colonial Mutual at 48‑49.  In effect the conclusion is that an omission by a solicitor as an officer of the court to carry out an order of the court is not within the limited circumstances where a principal is liable for an unauthorised act of the principal’s solicitor agent.

108               In my opinion this is the basis upon which the appeal should be resolved.

Conclusion

109               It follows I consider the appeal should be allowed.

Associate:

Dated: