FEDERAL COURT OF AUSTRALIA

Four Seasons Gutter Protection Pty Ltd v Leafbusters Pty Ltd (No 2)

[2004] FCA 1402

CONTEMPT OF COURT – publication of slightly amended version of injuncted document – no legal advice – recklessness – aggravating factors – malice – company and individual respondents – whether separate penalties – separate contempts in one course of conduct – discounting of total – effect of forfeiture of interlocutory relief and costs liability – effect of indemnity costs order

Four Seasons Gutter Protection Pty Ltd v Leafbusters Pty Ltd [2994] FCA 1290 cited

Mill v The Queen (1988) 166 CLR 54 at 63 applied

Australian Competition and Consumer Commission v Commercial and General Publications Pty Ltd [2002] FCA 1349 at [27]-[28] cited

Australian Prudential Regulation Authority v Holloway [2000] FCA 1245 at [13] cited

Australian Competition and Consumer Commission v Murray [2003] FCA 47 at [32] cited

Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2) (2002) 190 ALR 169 at [39] cited

Construction, Forestry, Mining & Energy Union v BHP Steel (AIS) Pty Ltd [2003] FCAFC 13 at [53] cited

Thomas, Principles of Sentencing, 2^nd ed. 1979 p 57

FOUR SEASONS GUTTER PROTECTION PTY LTD V LEAFBUSTERS PTY LTD

V 889 OF 2004

HEEREY J

MELBOURNE

29 OCTOBER 2004

THE COURT ORDERS THAT:

1.         The first respondent pay the sum of $14,000 by way of penalty to the District Registrar, Victoria District Registry, Federal Court of Australia within 30 days.

2.         The second respondent pay the sum of $14,000 by way of penalty to the District Registrar, Victoria District Registry, Federal Court of Australia within 30 days.

3.         Within 7 days, the respondents:

(a)                deliver up to their solicitors, for forwarding to the applicants’ solicitors, all copies in their possession or in the possession of their servants or agents of the ‘Alert Alert’ document, the Amended ‘Alert Alert’ document, the Second Amended ‘Alert Alert’ document and the Third Amended ‘Alert Alert’ document;

(b)               file and serve an affidavit specifying and describing the documents delivered up in accordance with order 3(a) and stating from whose possession such documents have been delivered up.

4.         The respondents pay 70 per cent of the applicants’ costs, including reserved costs, of and incidental to the contempt application on an indemnity basis such costs to be taxed forthwith and upon being taxed, be paid forthwith.

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

REASONS FOR JUDGMENT

1                     In a decision delivered on 11 October 2004, Four Seasons Gutter Protection Pty Ltd v Leafbusters Pty Ltd [2994] FCA 1290, I found the respondents, Leafbusters Pty Ltd and Theofani Tsioris, guilty of five charges of contempt of court.  Another charge was dismissed.  I have now heard submissions on penalty and costs.

2                     There are a number of aggravating features in this case.  First, although Leafbusters and Ms Tsioris were represented by senior and junior counsel at the hearing before Sundberg J, the inference to be drawn is that Ms Tsioris embarked on a campaign of publishing slightly amended versions of the prohibited document without obtaining legal advice.  She has not given any evidence as to this, but counsel for the respondents accepted that the inference was open and I have no hesitation in drawing it.  I think the further inference is compelling that Ms Tsioris did not seek legal advice because she suspected that such advice might interfere with what she had in mind.  It seems to me that any reasonably intelligent person, as Ms Tsioris seems to be, having been made the subject of Sundberg J’s order, would have realised that its effect could not be evaded simply by minor verbal changes which left the essential meanings of the injuncted document unchanged.  At the very least, such a person would seek advice from the lawyers who had appeared for her.  A reasonable person, injuncted from calling X a liar, would not think the order could be evaded by saying that X was a person who deliberately told untruths.  The Court is not so easily mocked.  I do not accept that in changing the subsequent documents Ms Tsioris had an honest and reasonable belief that she was not defying the Court’s order.  I conclude that she was at best reckless and did not care whether she breached the order or not.

3                     Secondly, the Amended Alert Alert document contains the statement:  “Here is the new announcement to comply with the above order”, thereby implying that the document not only does not breach the order but somehow is authorised or required by it.

4                     Thirdly, in the case of the publication to Tapex (charge 2) there was a substantial element of malice and ill will.  Tapex was a supplier of materials to both Four Seasons and Leafbusters.  Obviously the intention of sending the document to Tapex was to disrupt a vital business relationship of Four Seasons, something which would be more serious than the loss of one or two potential customers.

5                     Fourthly, in the case of charge 3 on 28 July 2004 the solicitors for Four Seasons wrote to the respondents’ solicitors demanding that Leafbusters stop publishing the Amended Alert Alert document and threatening an action for contempt.  On the next day the respondents agreed through their solicitors not to further publish the Amended Alert Alert document.  But on the very same day Leafbusters published the Second Amended Alert Alert document, a slightly amended version.

6                     Fifthly, the publication the subject of charge 5 occurred on 24 August 2004 which was after the originating motion, statement of charge and affidavits were served on Leafbusters’ solicitors the previous day.  The document had been reproduced as a glossy coloured A3 pamphlet.  As already mentioned, the personal malice of Ms Tsioris is exemplified by the fact that it was directed at the Murphys’ neighbours.

7                     Sixthly, the publication the subject of charge 6 was obviously intended to do the maximum damage to Four Seasons.  At the Home Show there was likely to be many thousands of potential customers for either Four Seasons or Leafbusters.

8                     At the hearing on 26 October 2004, counsel for the respondents gave an unreserved apology on behalf of Ms Tsioris.  He said that she now realised that she had committed a serious wrong.  She recognised that she was “misguided” in her interpretation of the Court’s orders.  She wanted to bring “this unfortunate episode” to an end.  She took “full responsibility for her past conduct and will meet whatever penalty the Court considers appropriate”.

9                     While I accept this apology, its value is much reduced by its lateness.  I do not criticise at all counsel for the respondents, who was of course bound by his instructions.  Nevertheless the contempt charges were defended on the most flimsy of arguments, resulting in delay and expense to Four Seasons and the occupying of valuable court time.

10                  The personal history of Ms Tsioris is as follows.  She is aged 49.  She was born in Greece and came to Australia with her parents as a very young child.  Her parents settled in Adelaide.  Ms Tsioris left high school at age 16 and worked as a clerk.  She married at the age of 19 and had two children.  The marriage became very unhappy as a result of her husband’s violence and in 1992 she went through a bitter divorce and custody battle.

11                  In 1992 she met Mr Groom, her present husband.  They started a gutter protection business in Adelaide.  Not long afterwards they left Adelaide, for reasons connected with her former husband’s behaviour, and established their business in Geelong.  The business prospered to the stage where about the middle of last year they had 14 staff.  However, about this time a business relationship with Mr Murphy broke down and he set up Four Seasons in competition.  This had a serious effect on Leafbusters’ business and by October 2003 it was in danger of collapse.  However by June 2004 they had rebuilt their workforce and business to about the same level as mid 2003.  In the middle of this year, counsel said, the business was affected by the wrongful tactics of Four Seasons and Mr Murphy and this lead to the publication of the first Alert Alert document.

12                  Counsel said that Ms Tsioris was a passionate person and notwithstanding the personal adversity of her divorce had determined to move on in life and had taken great pains to develop the business which had become the focus of her life.

13                  While I accept that Ms Tsioris has had a difficult personal life and has applied much energy on recovering from those difficulties, I do not think a great deal of weight can be given to this factor.  The rights and wrongs of the disputes between Four Seasons and Leafbusters have not been the subject of evidence before me.  I do not think I can proceed on the assumption that Ms Tsioris was justifiably provoked by wrongful conduct on the part of Four Seasons.  Obviously I am not making any finding in favour of Four Seasons in this regard; the matter has simply been not the subject of adjudication.

14                  These were serious and deliberate contempts.  The authority of the Court was flouted and substantial penalties are called for.

15                  It is appropriate to impose separate penalties on Ms Tsioris and Leafbusters.  There was no evidence as to the shareholding of Leafbusters.  Ms Tsioris is apparently not a director although she is described as the Chief Executive Officer.  Apparently Mr Groom is a director.  It seems reasonable to infer, in the light of the history of the business, that Ms Tsioris is not the sole beneficiary of the Leafbusters business.  This is therefore not the sort of case where a company is merely the alter ego of an individual and where it would be unfair to, in effect, impose the same penalty on the one person twice for the same conduct: see Australian Competition and Consumer Commission v Commercial and General Publications Pty Ltd [2002] FCA 1349 at [27]-[28], Australian Prudential Regulation Authority v Holloway [2000] FCA 1245 at [13], Australian Competition and Consumer Commission v Murray [2003] FCA 47 at [32].

16                  There will be imposed penalties on each of Leafbusters and Ms Tsioris in the following amounts:

17                  Although the total of $28,000 is substantially more than that proposed by counsel for Four Seasons, I would have fixed a still higher amount, had it not been for the following mitigating factors:

·        Each charge considered in isolation would warrant a larger penalty but there should be some discount because the total penalties imposed arise out of the one course of conduct.  The Court needs to “take a last look at the total just to see whether it looks wrong”:  Thomas, Principles of Sentencing, 2^nd ed. 1979 p 57 cited with approval in Mill v The Queen (1988) 166 CLR 54 at 63.  As to the application of this principle to cases of pecuniary penalties, see Australian Competition and Consumer Commission v ABB Transmission and Distribution Ltd (No 2) (2002) 190 ALR 169 at [39].

·        The respondents have by their actions forfeited their right to seek interlocutory relief against Four Seasons and have incurred a costs liability; see earlier judgment at [78]-[83].

·        The order which I will make for indemnity costs is a mitigating factor:  Construction, Forestry, Mining & Energy Union v BHP Steel (AIS) Pty Ltd [2003] FCAFC 13 at [53].

18                  I should note that no evidence has been tendered as to the financial circumstances of either respondent.  Accordingly this aspect is relevant neither to increase or reduce penalties, as it might have been had there been evidence:  Australian Competition and Consumer Commission v Rural Press Ltd (2001) ATPR 41-833 at [56].

19                  I shall not impose a term of imprisonment, even on a suspended basis.  I accept the submissions of counsel for the respondents to the effect that the message has finally got through to Ms Tsioris and that there will not be any future recurrence of these offences.  Should this occur, however, it would be inevitable that Ms Tsioris would face prison, and not merely a suspended sentence.

20                  It appears that some of the Alert Alert documents may still be in the possession of the respondents.  There will therefore be an order for delivery up.

21                  As to costs, it was not disputed that costs be on an indemnity basis.  Counsel for Four Seasons suggested that the order should be for 70 per cent of his clients’ costs on the basis that one out of the six charges was dismissed.  This is a sensible suggestion and was not opposed.

22                  There will be an order pursuant to O 62 r 3 that the costs be taxed and paid forthwith.

Associate:

Dated:              29 October 2004