FEDERAL COURT OF AUSTRALIA

Mobileworld Communications Pty Ltd v Q & Q Global Enterprise Pty Ltd [2004] FCA 1200

CONTEMPT OF COURT – injunction against use of name Crazy Ron’s – respondents caused listings to be published in Melbourne and Sydney White Pages cross-referencing Crazy Rons to Mad Rons – contempt of court admitted – question of penalty – whether a contumacious disregard of court’s orders – whether relevant mitigating factors which would reduce penalty – negligence

Mobileworld Communications Pty Ltd v Q & Q Global Enterprise [2003] FCA 1404, [2003] FCA 1579 cited

Pelechowski v Registrar, Court of Appeal (1999) 198 CLR 435 at [88] applied

Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 107 cited

Australian Competition and Consumer Commission v World Netsafe Pty Ltd (2003) 204 ALR 537 at [16]-[17] applied

Witham v Holloway (1995) 183 CLR 525 at 534-534 cited

MOBILEWORLD COMMUNICATIONS PTY LIMITED & ORS v Q & Q GLOBAL ENTERPRISE PTY LIMITED & ORS

V658/03

HEEREY J

15 SEPTEMBER 2004

MELBOURNE

THE COURT ORDERS THAT:

1.         It be declared that the respondents have committed contempt of this Court by lodging an application with Telstra Corporation Limited for listing in the Melbourne and Sydney White Pages telephone directories for 2004-2005 the entry “CRAZY RONS MOBILE PHONES (See Mad Rons Mobile Phones)” contrary to order 2 of the orders made herein on 8 December 2003;

2.         The fourth respondent BHL Group Pty Ltd pay a fine of $50,000 to the Registrar of the Court within thirty days;

3.         The respondents pay the applicants’ costs, including reserved costs, on an indemnity basis.

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

REASONS FOR JUDGMENT

1                     The applicants and the respondents are rival retailers of mobile phones.  The applicants traded as “Crazy John’s” and the respondents as “Crazy Ron’s”.  Perhaps unsurprisingly, litigation ensued.

2                     After a substantial trial, Allsop J last December found that the respondents had infringed the applicants’ trade marks and contravened s 52 of the Trade Practices Act 1974 (Cth): Mobileworld Communications Pty Ltd v Q & Q Global Enterprise [2003] FCA 1404, [2003] FCA 1579.  His Honour injuncted the respondents from using the names Crazy Ron or Crazy Ron’s except in connection with existing stores in south east Queensland (the applicants had traded in competition with the respondents in that area but had moved out in mid 1997; see [2003] FCA 1404 at [139]).

3                     As a consequence of the Court’s orders the respondents have adopted the name Mad Ron’s.  However, in circumstances which I shall shortly relate, the respondents caused an entry to be inserted in the Melbourne and Sydney White Pages telephone directories for 2004-2005 in these terms:

“CRAZY RONS MOBILE PHONES (See Mad Rons Mobile Phones)”

Under Mad Rons Mobile Phones is an entry for the respondents’ business.  The Melbourne and Sydney White Pages were published respectively in early July and early August 2004.

4                     The applicants have brought a motion seeking an order that the respondents be punished for contempt of this Court.  The respondents accept that contempt has been committed and have apologised to the Court.  The issue then is what is the appropriate penalty.

How the contempt occurred

5                     The founder of the respondents’ business was the eponymous Mr Ronny Bakir.  The first store was opened in 1996.  He is apparently no longer a shareholder or director of the respondents but still plays a prominent, if somewhat undefined, role in their management. 

6                     In about September 2003, Mr Nazih Masri of Sensis Pty Ltd (Sensis) contacted Mr Bakir.  Sensis is owned by Telstra.  It arranges listings in telephone directories.  Mr Bakir told Mr Masri that a number of new Crazy Ron’s stores had opened in Melbourne and Sydney and that details would need to be included in the telephone directories.

7                     On 15 January 2004 Mr Bakir sent an email to Mr Masri which relevantly said:

“All the current crazy rons stores listing (sic) need to be changed to mad rons mobile phones.

Call me if you need more info”.

8                     Sometime in January 2004 Mr Masri telephoned Mr Bakir and said that the deadline for entries in the directories for the Gold Coast and Sunshine Coast would be closing soon.  In the course of this discussion Mr Bakir referred to the change of name and Mr Masri suggested an entry “Crazy Ron’s Mobile Phones (see Mad Ron’s Mobile Phones)”.  This is known as a cross-reference.  Although the name of all stores by then had been changed to Mad Ron’s Mobile Phones, as already mentioned the injunction did not restrict the use of the name Crazy Ron’s in south east Queensland.  There was no discussion about the listings for Melbourne and Sydney at this stage.  Mr Bakir told Mr Masri that he should deal with Ms Angela Murray who was, and still is, an office assistant at the respondents’ office in Broadbeach, Queensland responsible for general administration. 

9                     Mr Masri telephoned Ms Murray.  She subsequently executed applications for entry in the Sunshine Coast White Pages in January and the Gold Coast White Pages in the following month.  There was some further discussion between Ms Murray and Mr Bakir in which he told her to negotiate a lower price with Mr Masri, which she accordingly did and reported back to Mr Bakir. In the conversations between Ms Murray and Mr Masri he suggested to her, as he had to Mr Bakir, the cross-reference entry.  In an affidavit sworn in this proceeding, Ms Murray deposed:

“Although I was aware from conversations with Mr Bakir in about December 2003 or January 2004 that there had been a court case and that the result of it was that the stores were changing to Mad Ron’s, I was not aware of the court order prohibiting the use of the word Crazy Ron’s.”

10                  On about 17 February Mr Masri faxed Ms Murray an application form with draft listings for the Sydney and Melbourne stores.  Ms Murray telephoned Mr Masri and told him that she was only responsible for the Sunshine Coast and Gold Coast listings.  She gave him the telephone number of the Melbourne office so he could arrange those listings with someone there.

11                  Ms Murray telephoned Ms Maria Alessi in Melbourne.  Ms Alessi is the administration manager for the respondents’ New South Wales and Victorian stores.  Ms Alessi asked Ms Murray to fax a copy of the application form to Ms Natalie Canzoneri in Melbourne.  Ms Alessi was absent from work due to illness.

12                  Ms Alessi then telephoned Ms Canzoneri and told her that she would be receiving a faxed copy of the application to be submitted to Sensis urgently to meet closing deadlines.  Ms Alessi told Ms Canzoneri to verify the contact details to ensure that they were current and correct.  Ms Canzoneri shortly afterwards telephoned Ms Alessi back and told her that the application had been approved by Ms Daniella Amore and submitted to Sensis.

13                  Ms Amore is a director of some of the respondent companies.  On about 17 February, Ms Canzoneri presented her with applications for listings in the Melbourne White and Yellow Pages.  Ms Canzoneri told her that the application had to be submitted urgently because the deadlines were closing soon.  At the time, Ms Amore was preoccupied with some other tasks and the office was short-staffed.  She was particularly busy.  She asked Ms Canzoneri if she had checked the numbers on the document and Ms Canzoneri said that she had.

14                  Ms Amore was aware at the time that the respondents had been unsuccessful in the court proceedings held late the previous year.  From discussions that she had with Mr Sebastian Canzoneri (the father of Natalie Canzoneri and the Chief Executive Officer of the respondents) and Mr Bakir at that time, and in early 2004, she understood that the respondents were not to trade under the name Crazy Ron’s and accordingly the name had been changed to Mad Ron’s.  Ms Amore deposed:

“I do not recall whether I saw the reference to Crazy Ron’s on the documents.  Had I paid proper attention to their contents I would have given proper thought to reference to Crazy Ron’s and spoken to Mr Canzoneri before signing.”

15                  Ms Canzoneri is currently in the United States and did not give evidence.

16                  The evidence is somewhat unclear as to how the entry came to be made in the Sydney White Pages.   There is no doubt, and the respondents accept, that the entry was authorised on their behalf.  I infer that it was probably authorised by Ms Amore.  It seems the Sydney operations were administered from Melbourne.

17                  In summary, it seems that nobody within the respondents adverted to the fact that use of the name Crazy Ron’s, while permissible in south east Queensland directories, would contravene the Court order if used in the Melbourne and Sydney directories.

Remedial steps

18                  Mr Canzonerei said that he became aware of the publication of the offending entry when his solicitors passed to him a copy of a letter from the applicants’ solicitors Corrs Chambers Westgarth dated 22 July 2004.  Mr Canzonerei immediately instructed his solicitors to take steps to remove the item from the online White and Yellow Pages and to prevent any further listing.  This was done.  Mr Canzonerei deposed:

“The publication of the cross-referenced item was the regrettable result of human error and I take responsibility as Chairman of the BHL Group for it not being detected by my staff prior to being approved for publication.  It was certainly not the result of a deliberate exercise at my instruction to continue publication of the name Crazy Ron’s in Victoria or New South Wales.”

19                  On 7 August Mr Canzoneri caused a notice to be published to all staff of the respondents as follows:

“Since 4 December 2003 Mad Ron’s has been prohibited by the Federal Court of Australia in respect of trading by reference to “Crazy Ron’s” or www.crazyrons.com.au outside of the Gold Coast.

The prohibition is to be strictly observed by all staff of the Mad Ron’s Group.  Where there is any doubt over the use of wording you should revert to Ms Danni Amore or myself without exception.

Strict penalties will apply to the Group if the orders are in any way infringed.

All store managers outside the Gold Coast are again instructed to conduct an audit of their stores to identify possible contraventions of the court orders.”

20                  The respondents have 16 stores in Melbourne and Sydney.

21                  Mr Canzoneri deposed that on behalf of the respondents he offered to the applicants and the Court an unreserved apology for publication of the cross-reference.

Relevant principles

22                  Contempt of court is a serious matter.  As McHugh J said in Pelechowski v Registrar, Court of Appeal (1999) 198 CLR 435 at [88]:

“If breaches of the orders of the courts were regarded as of little moment, respect for and observance of the law would inevitably deteriorate and, ultimately, pose a threat to social order.”

See also Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 107. 

23                  In Australian Competition and Consumer Commission v World Netsafe Pty Ltd (2003) 204 ALR 537 at [16]-[17], Spender J summarised some of the relevant considerations in fixing an appropriate penalty.  These include:

(a)                the relative seriousness of the contempt, which is determined by the extent to which the contemnor appreciated that a contempt was being committed;

(b)               whether the contemnor subjectively intended to disobey the order;

(c)                the importance of bringing home to the contemnor the seriousness of the contempt;

(d)               whether the contemnor has offered any explanation or apology for his conduct;

(e)                an acknowledgment by the contemnor that a contempt was committed;

(f)                 any attempt by the contemnor to comply with the order in question; and

(g)                partial compliance by the contemnor with the order in question.

24                  Further, the undoubted seriousness of any contempt of court necessarily requires an element of general deterrence in the fixing of a penalty.  There is a public interest in the administration of justice which requires compliance with court orders.  Proceedings for contempt have the effect of vindicating judicial authority and thus involve punitive as well as remedial objects: Witham v Holloway (1995) 183 CLR 525 at 533-534.

25                  However in the present case there is nothing  that the Court can order which will have effect by way of reparation. Practically speaking this is not a case where the respondents can purge their contempt by ceasing some particular conduct or doing some particular act. The damage has been done.

Matters urged in mitigation of penalty

26                  Counsel for the respondents correctly submitted that I should take into account the prompt efforts to prevent further publication and the unreserved apology.

27                  Counsel further pointed out that the breach resulted from the initial suggestion of a third party (Sensis) and was a result of negligence, rather than an intentional flouting of the Court’s order.

28                  I do not see that the role of Sensis, through Mr Masri, in suggesting the cross-reference entry as something which assists the respondents.  Mr Masri cannot be blamed for this; from his point of view it was a sensible idea and of course was quite legitimate in relation to the Queensland directories.

29                  Notwithstanding the submissions on behalf of the applicants, I do not find that the contempt was contumacious.  It was deliberate, in the sense that the publication resulted from the intentional act of an authorised officer of the respondents in submitting the cross-reference for publication.  However, there is no basis in the evidence on which I could find that the persons involved in the publication were acting with a conscious awareness of the Court’s order and wilfully sought to defy it:  cf Mudginberri at 108.  Indeed I am positively satisfied that this was not the case.

30                  The contempt did arise, as counsel for the respondents freely admitted, from negligence.  Moreover, it was negligence of a substantial degree.  Management of the respondent companies should have made it clear to all employees not merely that a new name was being adopted but also that this was the result of a court’s order and that any contravention of that order would be a contempt of court.  Something along the lines of Mr Canzoneri’s belated notice of 7 August was called for.  Apart from anything else, such a clear warning should have been given in fairness to the respondents’ employees themselves so they might avoid being caught up in conduct that was unlawful, albeit unwittingly so.

31                  Counsel further submitted that the applicants could recover in their damages claim any loss occasioned by the breach.  I do not accept this as a mitigating factor.  Proof of actual damage suffered as a result of an infringement of this kind is difficult and expensive.  More importantly, in the circumstances of the present case, the Court is, as previously mentioned, concerned with objects other than reparation.  The penalty will, as the applicants seek, be paid to the Registrar of the Court and not to them.

32                  I should mention for the sake of completeness that no material was put forward by the respondents as to their capacity to pay any penalty that might be awarded.

Aggravating factors

33                  The Court upheld the applicants’ central claim that it was unlawful, and damaging to the applicants’ legitimate business interests, for the respondents to use the name Crazy Ron’s outside south east Queensland.  Yet, as a result of the respondents’ actions, that name will be exposed to a total population of some 8 million in a way which creates a real likelihood that business will thereby be attracted to the respondents.  For retailers of products for mass consumption, a telephone directory entry is a critical marketing tool.  Potential consumers who are generally aware of a particular product and who wish to make an enquiry or purchase will very often use the telephone directory either to call a retailer or locate a convenient retailer’s address.  By the publications in question the respondents have illegitimately obtained that benefit for twelve months at least.  Since old telephone books are not always replaced promptly, the use may extend beyond that period in relation to many potential consumers.

Penalty

34                  In my view an appropriate penalty is $50,000.  Since there was the one offence I think it is appropriate to apply that penalty to the fourth respondent, BHL Group Pty Ltd, which is the holding company of the group.  There will be an appropriate declaration.

35                  In accordance with the usual practice the respondents should pay the applicants’ costs on an indemnity basis.

Associate:

Dated:              15 September 2004