FEDERAL COURT OF AUSTRALIA

Australian Competition and Consumer Commission v Levi (No 3) [2008]

FCA 1586

CONTEMPT – breach of Court orders restraining respondent from offering businesses for sale without first satisfying certain conditions – belated guilty plea – substantial criminal record – previous imprisonment for offences of similar nature to that constituting the contempt - principles relevant to imposing penalty – appropriate penalty where respondent bankrupt – whether sentence of imprisonment appropriate – whether sentence should be suspended – no prior contempt – held repeated and flagrant breach of Court orders – substantial damage to the public – limited, if any, remorse

Held:  Ten months’ imprisonment ordered with six months suspended subject to compliance for five years with conditions.  

Federal Court of Australia Act 1976 (Cth) s 31(1)

Judiciary Act 1903 (Cth) s 24

Trade Practices Act 1974 (Cth) ss 51AD, 52

Ambrose (trustee), Re; Athanasas (bankrupt) (No 2) [2008] FCA 1016

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

Australian Competition & Consumer Commission v Australian Taxation Information Services Pty Ltd [1999] FCA 1607

Australian Competition & Consumer Commission v INFO4PC.com Pty Ltd (2002) 121 FCR 24

Australian Competition & Consumer Commission v World Netsafe Pty Ltd (2003) 133 FCR 279

Australian Competition and Consumer Commission v Bon Levi [2008] FCA 68

Australian Competition and Consumer Commission v Contract Plus Group Pty Ltd (in liq) (No 2) (2006) 232 ALR 364

Australian Competition and Consumer Commission v Dynacast (Int) Pty Ltd [2007] FCA 429

Australian Competition and Consumer Commission v Globex Systems Pty Ltd [2005] FCA 550

Australian Competition and Consumer Commission v Goldstar Corporation Pty Ltd [1999] FCA 585

Australian Competition and Consumer Commission v Hercules Iron Pty Ltd [2008] FCA 1182

Australian Competition and Consumer Commission v Hughes (t/as Crowded Planet) (2004) 207 ALR 116

Australian Competition and Consumer Commission v Hughes [2004] FCA 519

Australian Competition and Consumer Commission v Purple Harmony Plates Pty Ltd (No 3) (2002) 196 ALR 576

Australian Prudential Regulation Authority v Siminton (No 11) [2007] FCA 1815

Australian Prudential Regulation Authority v Siminton (No 3)(2006) 230 ALR 528

Australian Prudential Regulation Authority v Siminton (No 8) [2007] FCA 1612

Australian Prudential Regulation Authority v Siminton (No 10) [2007] FCA 1814

Australian Securities & Investments Commission v Eagle Inter-Link Pty Ltd [2002] FCA 1524

Australian Securities & Investments Commission v Michalik (2004) 52 ACSR 115

Australian Securities and Investments Commission v Matthews (1992) 32 ACSR 404

Australian Securities and Investments Commission v Reid (No 2) [2006] FCA 700

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

Capel v CaramFinance Australia Ltd (formerly known as Marac Finance Australia Ltd)[2000] 2 Qd R 126

Capel v Caram Finance Australia Ltd [1998] QSC 110

City Hall Albury Wodonga Pty Ltd v Chicago Investments Pty Ltd [2006] QSC 31

Commissioner for Fair Trading v Oliver [2004] NSWSC 722

Commissioner of Fair Trading, Department of Commerce v Jenness [2007] NSWSC 439

Dietrich v The Queen (1992) 177 CLR 292

Environment Protection Authority v Ableway Waste Management Pty Ltd [2005] NSWLEC 469

Hughes v Australian Competition & Consumer Commission [2004] FCAFC 319

Louis Vuitton Malletier SA v Design Elegance Pty Ltd (2006) 149 FCR 494

Official Trustee in Bankruptcy v Pastro [2001] FCA 234

Pattison (Trustee), in the matter of Bell (Bankrupt) v Bell [2007] FCA 137

R v Giscombe (1984) 79 CR APP R 79

Re Colina; Ex parte Torney (1999) 200 CLR 386

Registrar of the Supreme Court of South Australia v Temple (No 3) [2000] SASC 199

Scott & Ors v Evia Pty Ltd [2007] VSC 15

The Queen v Ronald Frederick (District Court, Criminal Jurisdiction, 28 February 2005)

Westpac v Leith Gordon Bagshaw [1999] NSWSC 479

AUSTRALIAN COMPETITION AND CONSUMER COMMISSION v BON LEVI and CRAIG CLEARY

QUD 155 of 2004

MCKERRACHER J

24 OCTOBER 2008

PERTH

THE COURT DECLARES THAT:

The first respondent, Mr Bon Levi is guilty of contempt of this Court in that in breach of the orders made on 28 February 2005 by Justice Kiefel the first respondent, Mr Bon Levi engaged in the conduct set out below:

1.                  In relation to Mr Paul Gerard Sonego:

1.1       between December 2005 and February 2006, selling a distributorship or other business opportunity, being a snack-food distributorship business, to Mr Paul Gerard Sonego (the Sonego business);

1.2       on or about 28 December 2005 accepting payment of $2,145 from Mr Sonego for the Sonego business; and

1.3       on or about 1 February 2006 accepting payment of $19,305 from Mr Sonego for the Sonego business;

without either:

1.4       the first respondent, his servants or agents having successfully conducted the Sonego business for at least 6 months prior to it being offered for sale, or at all; or

1.5       notifying Mr Sonego, either at least 7 days prior to entering into a binding agreement with Mr Sonego or at all, in writing of any of the matters set out in paragraph 11(d) of the orders.

2.                  In relation to Mr Vinko Jorgic:

2.1       on or about 9 March 2006, selling a distributorship or other business opportunity, being a snack-food distributorship business, to Mr Vinko Jorgic (the Jorgic business):

2.2       on or about 9 March 2006 accepting payment of $2,180 from Mr Jorgic for the Jorgic business; and

2.3       on or about 28 March 2006 accepting payment of $19,270 from Mr Jorgic for the Jorgic business

without either:

2.4       the first respondent, his servants or agents having successfully conducted the Jorgic business for at least 6 months prior to it being offered for sale, or at all; or

2.5       notifying Mr Jorgic, either at least 7 days prior to entering into a binding agreement with Mr Jorgic or at all, in writing of any of the matters set out in paragraph 11(d) of the orders. 

3.                  In relation to Mr Thiyagarajah Thamorampillai:

3.1       in or about March 2006 to May 2006, selling a distributorship or other business opportunity, being a snack-food distributorship business, to Mr Thiyagarajah Thamorampillai (the Thamorampillai business);

3.2       on or about 3 April 2006 accepting payment of $1,950 from Mr Thamorampillai for the Thamorampillai business; and

3.3       on or about 1 May 2006 accepting payment of $19,500 from Mr Thamorampillai for the Thamorampillai business;

without either:

3.4       the first respondent, his servants or agents having successfully conducted the Thamorampillai business for at least 6 months prior to it being offered for sale, or at all; or

3.5       notifying Mr Thamorampillai, either at least 7 days prior to entering into a binding agreement with Mr Thamorampillai or at all, in writing of any of the matters set out in paragraph 11(d) of the orders. 

4.                  In relation to Mr John David Eaton:

4.1       on or about 17 August 2006, or alternatively on or about 26 August 2006, selling a partnership or other business opportunity, being a partnership for a gas conversion business, to Mr John David Eaton (the Eaton business);

4.2       on or about 17 August 2006 accepting a part payment in the amount of $4,400 from Mr Eaton for the Eaton business;

4.3       on or about 5 September 2006 accepting a part payment in the amount of $20,000 from Mr Eaton for the Eaton business;

without either:

4.4       the first respondent, his servants or agents having successfully conducted the Eaton business for at least 6 months prior to it being offered for sale, or at all; or

4.5       notifying Mr Eaton either at least 7 days prior to entering into a binding agreement with Mr Eaton or at all, in writing of any of the matters set out in paragraph 11(d) of the orders.

5.                  In relation to Mr Justin Charles Anzellino:

5.1       on or about 11 December 2007 knowingly participating in the sale by the Australian Massage Trust, or the Australian Therupetic Massage Trust, of a partnership or other business opportunity, being a partnership for a massage business to be operated at Osborne Park, Western Australia, to Mr Justin Charles Anzellino (the Anzellino business);

5.2       on or about 11 December 2007 knowingly participating in the acceptance by the Australian Massage Trust, or the Australian Therupetic Massage Trust, of a part payment in the amount of $12,000 from Mr Anzellino for the Anzellino business;

5.3       on or about 18 December 2007 knowingly participating in the acceptance by the Australian Massage Trust, or the Australian Therupetic Massage Trust, of a part payment in the amount of $54,000 from Mr Anzellino for the Anzellino business;

without either:

5.4       the first respondent, his servants or agents or the Australian Massage Trust, or the Australian Therupetic Massage Trust, having successfully conducted the Anzellino business for at least 6 months prior to it being offered for sale, or at all; or

5.5       notifying Mr Anzellino either at least 7 days prior to entering into a binding agreement with Mr Anzellino or at all, in writing of any of the matters set out in paragraph 11(d) of the orders.

THE COURT ORDERS THAT:

1.                  The first respondent be imprisoned for a period of 10 months commencing from today, with the first 4 months being served in any event.

2.                  The balance of the sentence of 10 months will be suspended from execution upon the basis that if the first respondent within a period of 5 years from today, breaches the following conditions, the provision for suspension shall operate so that the first respondent must there upon be imprisoned for at least the remainder of the 10 month period not served, namely, the residual period of 6 months, the conditions being:

(a)        the first respondent not, without leave of this Court first being obtained:

·                    sell; or

·                    advertise or promote for sale; or

·                    accept any payment or part payment for;

any business opportunity whatsoever.

(b)        the first respondent not, without leave of this Court first being obtained knowingly participate in any other person or entity:

·                    selling; or

·                    advertising or promoting for sale; or

·                    accepting any payment or part payment for;

any business opportunity whatsoever.

The expression ‘business opportunity’ includes, but is not limited to, any franchise, training business, distributorship, manufacturing licence, partnership, import or export licence, purchasing or operating licence, marketing agreement or other business opportunity howsoever described. 

3.                  The first respondent is to pay the applicant’s costs of and incidental to this application on an indemnity basis.  That is to say, all of the applicant’s costs in these proceedings be paid in full by the first respondent except to the extent that those costs are shown to have been unreasonably incurred. 

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

REASONS FOR JUDGMENT

INTRODUCTION

1                     By orders of Kiefel J on 28 February 2005 the first respondent, Mr Bon Levi was restrained for a five year period from advertising any business for sale without, amongst other things, producing to a potential purchaser various documents.  The detail of this will be explained below.  The orders were made by consent but they followed a lengthy history of Mr Levi advertising and selling nonexistent or not profitable businesses and benefiting substantially from that process. 

2                     Although similar orders were also made against the second respondent, he is not the subject of these contempt proceedings. 

3                     Almost immediately after her Honour’s orders were made, Mr Levi breached them.  Indeed, he continued to breach the orders by advertising further such businesses for sale, (as well as receiving funds as a result of such advertisements) after these contempt proceedings brought by the applicant, the ACCC were initiated. 

4                     Mr Levi is not young and is not in particularly good health.  Nevertheless, the ACCC contends that a substantial sentence of imprisonment is appropriate due to the nature of the contempts concerned.  For Mr Levi it has been argued that it is the first of any form of contempt of court even though it must be accepted that the conduct constituting the contempt bears a marked similarity to conduct for which Mr Levi has previously been imprisoned. 

5                     For reasons which appear below, I cannot accept that the series of contempts, as serious as they were, would warrant simply a suspended sentence of imprisonment.  I also consider that as a matter of law, previous criminal history pertaining to conduct very similar to that constituting the contempts may and in this instance, should, be taken into account in determining the appropriate penalty.  Equally, I do believe that there are considerations which would mitigate against a term of imprisonment as lengthy as that for which the ACCC contends.

BACKGROUND

6                     On 4 August 2004, the ACCC issued proceedings against Mr Bon Levi alleging contraventions of s 51AD and s 52 of the Trade Practices Act 1974 (Cth) (the TPA).  These proceedings related to the sale by him of distributorships, mostly involving a business called ‘Little Joe Snax’.  The distributorships purportedly sold involved the distribution of snack food products.  The conduct which those proceedings addressed took place between 1 August 2003 and 20 July 2004. 

7                     By consent, declarations and orders were made on 28 February 2005 by Kiefel J.  Her Honour declared that:

(a)        Mr Levi, in offering and entering into the various distribution agreements, was a franchisor and the agreements offered by him were franchise agreements;

(b)       Mr Levi had failed to comply with the Franchising Code of Conduct (the Code) in multiple respects in relation to each of the 65 franchise agreements in the schedule to the order, and on each such occasion contravened s 51AD of the TPA;

(c)        Mr Levi engaged in misleading and deceptive conduct in breach of s 52 of the TPA by representing that:

(i)         he would secure a minimum of 75 retail outlets for each distributorship;

(ii)        he would pay each purchaser of a distributorship the amounts set out in their agreements;

(iii)       he would conduct a national advertising campaign to establish Little Joe Snax as a substantial competitor to major snack food brands in Australia;

(iv)       he was successfully operating a business of the type of the relevant distributorship which manufactured or acquired the product in question;

(v)        he was able to generate orders for the products in question which would ensure that for the term of each distribution agreement the distributor would have a minimum number of retail outlets to which to deliver the product;

(vi)       he would ensure that each distributor would receive a minimum weekly payment from him for the term of each agreement;

(vii)      he had reasonable grounds to believe that he had the means to make good his representations;

(viii)      he had exercised reasonable care and skill in making any forecasts;

(ix)       he had provided potential purchasers with all such information as to his personal history and business experience as required by law;

(x)        he had informed all potential purchasers of all matters known to him that might substantially limit, qualify or restrict his ability or capacity to perform his obligations under the agreements; and

(xi)       in the case of master distributorships for the distribution of beverages, he was able to source and contract for the supply of such beverages, including alcoholic beverages.

8                     Additionally and also by consent her Honour ordered Mr Levi be restrained for a period of five years from the date of the orders from:

(a)        advertising, promoting or offering for sale;

(b)       knowingly participating in any other person advertising, promoting or offering for sale,

any franchise, training business, distributorship, partnership or other business opportunity (a proposed agreement) unless:

(c)        prior to doing those things, he had a ‘solicitor’s notice’ (as to which, see below) and that notice was provided to each potential purchaser at least 3 days before entering into any binding agreement or accepting any payment; or

(d)       there were no ‘proscribed circumstances’ (as to which, see below).

A ‘solicitor’s notice’ meant a certificate from a solicitor in which the solicitor:

(a)        certified that the solicitor was currently on the roll and had a current practising certificate;

(b)       certified that he or she had been provided with the terms of the proposed agreement and annexed a copy of the terms of the proposed agreement to the certificate;

(c)        made certain statements required by the orders;

(d)       certified whether the solicitor considered the proposed agreement to be a franchise agreement;

(e)        certified that if the solicitor considered the proposed agreement to be a franchise agreement, that the solicitor has been provided with such disclosure documents as are required to be provided under the Franchising Code of Conduct (the Code) and annexed those documents to the notice;

(f)        certified that the solicitor considered that such disclosure documents comply in all respects with the Code; and

(g)        certified that the solicitor had considered all representations as to future matters in the proposed agreement and set out all matters and grounds relied on by the representors in making those representations.

‘Proscribed circumstances’ meant circumstances in which the proposed agreement involved an ongoing business relationship between the offeror and the purchaser and any one or more of the following:

(a)        involved trade or commerce between Australia and places outside Australia;

(b)       involved trade or commerce among the States of Australia;

(c)        involved trade or commerce within a Territory of Australia, between a State and a Territory, or between two Territories;

(d)       involved trade or commerce by way of the supply of goods or services to the Commonwealth; or

(e)        was negotiated or entered into or carried out through the use of postal, telegraphic or telephonic services, including the use of the internet or of electronic funds transfer.

9                     Further, her Honour ordered (also by consent) that Mr Levi be restrained for five years from:

(a)        selling or accepting payment or part payment for; or

(b)       knowingly participating in any other person selling or accepting part payment for;

any proposed agreement unless either:

(c)        the business has been successfully conducted for at least 6 months prior to being offered for sale; or

by para 11(d) of her Honour’s orders to which reference appears below:

(d)       at least 7 days prior to the earlier of entering into a binding agreement for the sale or accepting any payment whatsoever from a potential purchaser, [Mr Levi] has notified the potential purchaser in writing:

i.          that he was the first respondent in these proceedings and provided the potential purchaser with a copy of these orders;

ii.          that he had previously used the names Ronald Frederick Heelan, Ronald Frederick, Roddy Farrow, Brett Wyatt, Ronald White and Bon Levi;

iii.         of full details of his actual experience and expertise in conducting or operating the business in question;

iv.         if any product is to be supplied or distributed or promoted under the proposed agreement, whether there is in place a concluded contract in relation to the acquisition of that product by the respondent or the other person offering the proposed agreement;

v.         whether the proceeds from entering into the proposed agreement are to be, or are likely to be, applied to paying any entitlement or amount due to another person with whom the respondent has previously entered into an agreement substantially similar to the proposed agreement; and

vi.         if the proposed agreement provides that any money will be paid to the purchaser at any time under the proposed agreement, what if any means, including bonds, deposits and bank guarantees, have been put in place to ensure all monies will be paid as they fall due. 

10                  Her Honour’s orders were served on Mr Levi together with a covering letter which advised him of the consequences of non-compliance with the orders.  This took place in early March 2005. 

11                  On the same date that these orders were made (28 February 2005), Mr Levi was also sentenced in the Southport District Court in Queensland after pleading guilty to four counts of wilful false promise and one count of misappropriation with a circumstance of aggravation. 

12                  At the time he contravened the TPA in the manner which gave rise to her Honour’s orders, Mr Levi had been on bail pending trial for the District Court offences.  He had been committed for trial in the District Court on 11 October 2002.  The ACCC make the point that notwithstanding being on bail in respect of the District Court charges, Mr Levi participated in the conduct which was the subject of her Honour’s orders. 

13                  As a consequence of his conviction in the Southport District Court, Mr Levi was sentenced to a term of imprisonment of 3½ years.  It was suspended for 5 years after serving 1 year and 25 days in pre-sentence detention. 

14                  The stark similarity of the conduct giving rise to those convictions is evident from the sentencing remarks of Newton DCJ (The Queen v Ronald Frederick (District Court, Criminal Jurisdiction, 28 February 2005) where his Honour said:

Your offending behaviour involved your advertising and making representations in respect of the establishment and maintaining of a number of business enterprises, thus attracting the payment of moneys from people who responded to your advertisements.  Their responses, no doubt, were largely prompted by the so-called guarantees made by you that they would receive a certain amount of money each week together with a percentage of net profits.  Up to $800 per week and five per cent of net profits were, as I understand the outline of the Prosecutor, mentioned by you in respect of Kamp and similar amounts in respect of other complainants. 

When the prospective purchasers or franchisees began to delve into matters that you had made representations to them about, it soon became apparent that the proposals really amounted to nothing more than a house of cards.  The weekly amounts were not paid, except in a couple of instances.  In other cases, cheques were dishonoured.  There were no net profits from which the clients could benefit. 

Some $90,400, I am told, was received by you in respect of these matters but that sum excludes the small amounts that were received by them for wages.  …

STATUTORY FRAMEWORK

15                  Section 31(1) of the Federal Court of Australia Act 1976 (Cth) (the Act) provides that:

(1)       Subject to any other Act, the Court has the same power to punish contempts of its power and authority as is possessed by the High Court in respect of contempts of the High Court.

16                  By s 24 of the Judiciary Act 1903 (Cth) it is provided that the High Court has the same power to punish contempts ‘as is possessed as at the commencement of this Act by the Supreme Court of Judicature in England’.  The power of the English courts to punish for contempt of court as at the date of commencement of the Judiciary Act was limited to the power to fine or the power to imprison.  It has now been accepted that there are relatively minor variations of these two basic powers.  For example in Australian Competition & Consumer Commission v INFO4PC.com Pty Ltd (2002) 121 FCR 24 Nicholson J held:

138      The Federal Court has a wide range of penalties open to it (Australian Securities Investment Commission v Matthews (1999) 32 ACSR 404 at 411 (ASIC v Matthews) per Sackville J) and includes the power to:

(a)        commit a contemnor to prison for an indefinite period of time (Gallagher v Durack (1983) 152 CLR 238; Flamingo Park Pty Ltd v Dolly Dolly Creation Pty Ltd (1985) 5 FCR 169 at 178 per Wilcox J);

(b)       to impose a fine for a wilful breach of an order or undertaking (Australasian Meat Industry Employees’ Union v Mudginberri Station Pty Ltd (1986) at 109 – 113; Flamingo Park Pty Ltd at 178 per Wilcox J);

(c)        to impose a daily fine (Australasian Meat Industry Employees’ Union at 113 – 115); and

(d)       to order the sequestration of the assets of a contemnor (Australasian Meat Industry Employees’ Union at 115 – 116); and

(e)        to suspend on condition any sentence of imprisonment that it might impose in respect to contempt (Australian Competition & Consumer Commission v Goldstar Corp Pty Ltd [1998] FCA 1441; ASIC v Matthews at 411).

17                  Although there has been a passing suggestion to the contrary, it appears to be established that there is no power in the Federal Court to impose a community service order (a creature of statute) for the reasons expressed by Gray J in Pattison (Trustee), in the matter of Bell (Bankrupt) v Bell [2007] FCA 137 at 46-48. 

GENERAL CONSIDERATIONS IN CONTEMPT CASES

18                  In Australian Competition & Consumer Commission v World Netsafe Pty Ltd (2003) 133 FCR 279 Spender J said at [16]:

Considerations which are relevant in deciding what is the appropriate penalty 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: Australian Competition and Consumer Commission v Info4PC.com Pty Ltd (2002) 121 FCR 24 at [144].

(b)        Whether the contemnor subjectively intended to disobey the order: Attorney-General v Times Newspapers Ltd [1992] 1 AC 191 at 218; Australian Competition and Consumer Commission v Hughes [2001] ATPR 41-807 at [20]; and Info4PCCom.

(c)        The importance of bringing home to the contemnor the seriousness of the contempt: Hughes at [24]; Info4PCCom at [139].

(d)        Whether the contemnor has offered any explanation or apology for his conduct: Gallagher v Durack (1983) 152 CLR 238, per Gibbs CJ, Mason, Wilson and Brennan JJ at 245.

(e)        An acknowledgment by the contemnor that a contempt was committed may be a mitigating factor: Matthews at [25] and [29].

19                  In a similar vein, in the context of breach of the terms of a mareva order, Palmer J in Australian Securities & Investments Commission v Michalik (2004) 52 ACSR 115 said at [29]:

29        For present purposes the relevant factors to be considered may be summarised thus: 

i)          the seriousness of the contempt proved;

ii)         whether the contemnor was aware of the consequences to himself of what he proposed to do;

iii)        the actual or potential consequences of the contempt on the proceedings in which the contempt was committed;

iv)        whether the contempt was committed in the context of a proceeding alleging crime or conduct seriously prejudicial to the public interest:  see, for example, Von Doussa v Owens (No 3) (1982) 31 SASR 166;

v)         the reason or motive for the contempt;

vi)        whether the contemnor has received, or sought to receive, a benefit or gain from the contempt;

vii)       whether there has been any expression of genuine contrition by the contemnor;

viii)       the character and antecedents of the contemnor;

ix)        what punishment is required to deter the contemnor and others of like mind from similar disobedience to the orders of the Court;

x)         what punishment is required to express the Court's denunciation of the contempt.

20                  It is clear from the observations of Gibbs CJ, Mason, Wilson and Deane JJ in Australasian Meat Industry Employees’ Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 that the underlying rationale for the exercise of the contempt power is the necessity to uphold and protect the effective administration of justice.  Their Honour’s said at 107:

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 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."

21                  Thus it was also observed in INFO4PC.com 121 FCR 24 at [141] a sentence for contempt is punitive and an order to vindicate the authority of the court. 

22                  As observed in Australian Competition and Consumer Commission v Globex Systems Pty Ltd [2005] FCA 550 at [59]-[60] a contempt may be technical where the contemnor has taken all reasonable steps to comply with the Court’s orders notwithstanding which an unintentional breach has occurred or it may be wilful where the breach is something more than casual, accidental or unintentional.  As the ACCC submits is so in the present instance, it may be contumacious where the breach is a result of a deliberate act of defiance.

OFFERS TO SELL BUSINESSES

23                  As early as 5 March 2005, before the date of service of the orders of Kiefel J but at a time when he might reasonably be taken to have known of them given that he consented to them, Mr Levi commenced advertising opportunities for people to earn money in businesses around Australia.  Between 5 March 2005 and 27 May 2005 Mr Levi was responsible for advertising in the Sydney Morning Herald newspaper such opportunities.  They were opportunities to purchase businesses.  Those advertisements were essentially in the following terms:

(a)        Answer to earn up to $2,000 p.w.  Snack food delivery to shops.  No exp. Nec. Van Req. Dep. $10,000.  Terms start immed. Ph. 0404 093 744.

(b)        Answer to $2,000 wk.  Food & drink distribution.  No exp. Nec.  Earn up to $2,000 wk.  $500 wk. for 10 weeks while you learn.  Price $39,000 0404 093 744.

(c)        Food Manufacturing Partnership.  Huge national demand ingoing.  $100,000. Weekly wage $2,000+profits.  0404 093 744.

(d)        Top entertainer producing CDs, huge profits partner req $100,000 0404 093 744.

(e)        Bar – Surfers Paradise young girl seeks partner ongoing $100,000 Ph. 0404 093 744.

(f)         Massage School (new) partnership $40,000, high income no exp. Nec 0404 093 744.

24                  Following these advertisements, between the end of May 2005 and October 2006, Mr Levi was responsible for at least another 126 advertisements for the sale of business opportunities in newspapers which included the Sydney Morning Herald, The Age, The Courier Mail, The Gold Coast Bulletin and The Sunday Times. 

25                  None of those businesses had been operated for six months and many had not been operated at all.  Advertisements thus appearing included the following:

(a)        Packaging Food.  Earn $2,000 p.w.  Price $40,000.  Training.  No exp. Nec. 0416 766 260.

(b)        Automotive Safety Device.  World market potential – Active research. Partner requested $2,000 pw wage – ingoing $100k.  Ph. 0416 766 260.

(c)        Delivery. $2,000 p.w. no selling. Price $19,500. Ph 0416 766 260.

(d)        Investor with $100,000 New technology.  100 p.c. return 0410 239 630.

(e)        Wholesale Food Earn $2,000 pw. Price $40,000. Ph: 0410 239 630.

(f)         Nude female models business photographer, partnership.  Exp not necessary.  Will train.  Ingoing $60,000.  good income.  Well estab. 0410 239 630.

(g)        Cookies & Chips Deliveries.  Earn $2,000 p.w. Price $19,500.  0404 093 744.

(h)        Packaging Food Earn $2,000/week.  Price $40,000. no experience necessary.  Australian Snack Food Packaging BN 19695469 0415 043 979.

(i)         Auto Gas Conversion Mech req partner exp not nec.  Will train potential income $2,000 p/wk $40,000 0416 863 037.

(j)         Hotel Partnership in WA currently doing $20,000 p.w. will triple per week with skimpy girls.  Ingoing is $350,000, expected income is $5,000 p.w. paid to you + Exp. not nec. 0416 863 037.

(k)        Import Partner overseas travel, income $5,000wk plus no exp necessary.  Ingoing $200,000.  0420 244 103.

(l)         Massage & Sauna (New) Great opp to earn $1,000 wk, all female staff, simple to manage – Ingoing $24,000 partnership 0420 244 103.

(m)       Skimpy Girls Opening soon. lic restaurant.  Active partner/manager.  Ingoing $40,000.  0420 244 103.

(n)        Hydro Therapy Health business colonic’s suit woman, exp not nec. Full training & partnership.  You may earn $2,000 wk plus.  Ingoing $60,000 0404 730 096.

(o)        Hairdressing (new) active partnership avail, exp not necess, all exp staff may expect $1,000 pw once establ.  Ingoing $38,000, 0404 730 096.

(p)        Bar near Surfers $30,000 wk T/O expected.  Being renovated.  Lady requires partner with $100,000.  Returns $2,000 wk if active to you or silent.  0415 096 891.

26                  The contempt charges as pursued by the ACCC are confined to the conduct of Mr Levi with five people who responded to such advertisements. 

WARNINGS

27                  On 24 February 2006 Mr Launder for the ACCC wrote to Mr Levi alerting him to possible breaches of the orders.  Mr Launder received a response from Mr Levi dated 10 March 2006 in which Mr Levi wrote:

‘I truly believe that “I” BON LEVI are (sic) totally 100% complying with the orders made by the good judge on the 25th of February 2005.  Incidentally I was ‘forced’ into consenting to those orders by the ACCC and I intend to ‘take up that matter when I take the “litigation” against yourself and the ACCC in the not to (sic) distant future…’

28                  A complaint was received by the ACCC that Mr Levi had been attempting to sell a distributorship for the sale of ‘Hot Stuff Cassava and Cookies’.  Mr Launder, on behalf of the ACCC, also wrote again to Mr Levi in relation to that complaint on 22 March 2006.  On this occasion he again set out the terms of the Court orders.  On 31 March 2006, Mr Levi replied by letter accusing the complainants of being a party to a conspiracy of entrapment and corruption with the ACCC. 

29                  The ACCC submit and I accept that the tenor of this correspondence when considered together with the communications with other complainants, to which I will refer below, indicate, at least until the time of this hearing, an attitude of belligerence, aggression and arrogance on the part of Mr Levi. 

30                  Mr Levi has now pleaded guilty to the contempt charge and has accepted the correctness of the facts relied upon by the ACCC.  Those facts are as follows.

Mr Paul Sonego

31                  On about 17 December 2005, Mr Sonego read an advertisement in the Sydney Morning Herald newspaper.  It involved the sale of a distribution business.  The price was $19,500.  He telephoned the advertised number and spoke with Mr Levi.  Mr Levi told him that the business involved delivery of chips to a list of customers from the database.  In fact the business did not exist and therefore had never been successfully operated.  Mr Sonego had a number of other telephone conversations with Mr Levi.  On 23 December 2005, Mr Sonego completed an application form and obtained a bank cheque made payable to ‘Bon Levi’ for the sum of $2,145.  He sent those documents to Mr Levi.  On or about 31 January 2006, Mr Sonego obtained a further bank cheque for $19,305.  It also was payable to Bon Levi and together with a signed distribution agreement he forwarded the bank cheque and the agreement to Mr Levi.  In early February 2006, because Mr Levi had told Mr Sonego that the business was ready to commence, Mr Sonego purchased a new van at a price of $22,500 to use for the business. 

32                  Mr Sonego continued to write to and receive correspondence from Mr Levi up until late July 2006.  Increasingly over that period of time, Mr Sonego became concerned that there was no manifestation of the distribution business which had been advertised and which he had purchased.  The distribution business never commenced and Mr Sonego never received the customer list from Mr Levi.  He never received payments from Mr Levi.  Mr Levi never refunded the money to Mr Sonego despite request. 

33                  In more than a dozen letters and faxes sent to Mr Sonego in the period between December 2005 and July 2006, Mr Levi continued to make baseless and false claims about the commencement of the distribution business.  Mr Sonego was never informed by Mr Levi of the matters set out in par 11(d) of the orders of Kiefel J.  Mr Sonego’s business had not been operated successfully for at least six months prior to its sale to Mr Sonego or indeed at all.  It follows that Mr Levi breached the requirements of par 11 of her Honour’s orders in respect of the sale of the alleged distribution business to Mr Sonego. 

34                  At about this time, while the current correspondence ensued between Mr Sonego and Mr Levi, on 1 February 2006 Mr Guy Launder of the ACCC communicated with Mr Levi advising him that the ACCC had become aware that Mr Levi was continuing to advertise business opportunities.  Mr Launder sought confirmation from Mr Levi that he was complying with the orders of her Honour.  In a response which Mr Launder received from Mr Levi on 2 February 2006, Mr Levi told Mr Launder:

Dealing with your allegation “You are advertising again” My statement is that this again like your 66 allegations of previous attack by the ACCC.  My statement is “Prove it! (sic)

Mr Vinko Jorgic and Mrs Daniela Jorgic

35                  At about the same time as these events were occurring, Mr Vinko Jorgic and Mrs Daniela Jorgic read advertisements in The Age newspaper on 4 February 2006.  These advertisements were in respect of a packaging food business being for sale for $40,000 and a delivery business being for sale for $19,500.  As with the other complainants, they responded to the advertisements.  They were sent Little Joe Snax marketing material together with application forms to buy the businesses. 

36                  They took steps to visit the Little Joe Snax ‘factory’ while they were on holiday on the Gold Coast.  After meeting the packager there and after further telephone conversations with Mr Levi, Mr Jorgic paid a deposit of $2,180 by way of a personal cheque made payable to Bon Levi and then on 28 March 2006 paid the remaining $19,270.  This payment was made by bank cheque to Bon Levi.  The payments were in respect of the purchase of the Little Joe Snax business.  So that they could pay for the business, Mr and Mrs Jorgic obtained funds by extending their mortgage over their family home by an additional $19,270.  They have paid interest on that amount since 20 March 2006.  Again, despite various communications with Mr Levi up until August 2006 in which further promises were made by him, Mr and Mrs Jorgic’s business did not commence, no customer lists were received and Mr Levi did not repay them their money. 

37                  Mr and Mrs Jorgic were never informed of the matters set out in par 11(d) of the orders of Kiefel J and the business had not been successfully operated for at least six months prior to its sale to them and in fact had not operated at all.  It follows that once again Mr Levi is in breach of the requirements of par 11 of her Honour’s orders in relation to the sale of the alleged distribution business to Mr and Mrs Jorgic. 

Mr Thiyagarajah Thamorampillai

38                  Also at about this time, on 25 March 2006 Thiyagarajah Thamorampillai saw an advertisement in the Sydney Morning Herald for a distribution business.  It was for sale for the sum of $19,500.  Mr Thamorampillai responded to the advertisement.  He also had a number of telephone discussions with Mr Levi.

39                  On or about 30 March 2006, Mr Thamorampillai paid a deposit of $1,950 for the Little Joe Snax distribution business.  He paid a further $19,500 on 28 April 2006.  Each of those cheques was made payable to ‘Bon Levi’.  In order to make the payments to him Mr Thamorampillai used family savings and borrowed $6,000 from his father-in-law.

40                  Once again, that distribution business did not exist and had not been successfully operated at all prior to Mr Thamorampillai purchasing it.  It did not succeed and after many discussions with Mr Levi, Mr Thamorampillai made unsuccessful attempts for his money to be refunded.  On no occasion was Mr Thamorampillai ever informed of the matters set out in par 11(d) of her Honour’s orders.  It followed that Mr Levi was in breach of the requirements of par 11 of her Honour’s orders in respect of the sale of the alleged distribution business to Mr Thamorampillai.

Mr John Eaton

41                  Mr John Eaton lives in Western Australia.  In early August 2006, Mr Eaton saw an advertisement in the Sunday Times newspaper published in Western Australia.  It advertised a 50% partnership in a gas conversion business.  The price for which the 50% partnership was being sold was $40,000.  The advertisement guaranteed income of $2,000 per week. 

42                  Mr Eaton responded to the advertisement and held several meetings with Mr Levi.  On 17 August 2006, Mr Eaton paid a deposit with a cheque made out to Bon Levi for $4,400.  On 5 September 2006, Mr Eaton made a further payment of $20,000 by cheque payable to Bon Levi.  Mr Eaton became concerned over the ensuing months when Mr Levi failed to supply the LPG tanks which he had promised and which were to be fitted to customer’s cars.  On 5 October 2006, a month after the second substantial payment for the business, Mr Levi visited Mr Eaton’s residence.  Mr Levi provided him there with a copy of the orders of Kiefel J dated 28 February 2005.  When Mr Levi handed him the orders, he said to Mr Eaton ‘if anyone asks, I gave you this before you signed the agreement’. 

43                  This was the only occasion when Mr Levi provided a copy of her Honours orders to any of the complainants and, of course, at this stage Mr Levi already had Mr Eaton’s payment for the supposed business. 

44                  At no stage did Mr Levi ever supply any gas conversion kits or tanks as he had previously promised Mr Eaton.  Moreover, at no stage did Mr Eaton ever receive any payments from Mr Levi.  Mr Levi never repaid any of the monies to Mr Eaton that Mr Eaton had paid for the purchase of the business. 

45                  Over and above the $24,400 Mr Eaton had paid Mr Levi, Mr Eaton also spent some $11,000 setting up a workshop and paid a bond of $2,860 for business premises from which the gas conversion business was to operate.  He also committed to the obligation of meeting monthly rental payments of $2,860.  At no time did the gas conversion business ever exist nor had it been successfully operated for six months or for any time at all prior to it being advertised and Mr Eaton’s purchase of it.  At no time was Mr Eaton informed of the matters set out in par 11(d) of her Honour’s orders prior to entry into the agreement to acquire an interest in the gas conversion business or prior to paying Mr Levi the purchase money.  The ‘business’ had not successfully operated for at least six months or at any time at all.  Once again, Mr Levi had breached the obligations of par 11 of her Honour’s orders in respect of the sale of the interest in the gas conversion business. 

Mr Justin Anzellino

46                  In late November 2007 some five months after the ACCC had filed the charge in these proceedings, Mr Justin Anzellino responded to a brochure which was left under his car windscreen wipers.  The brochure advertised for sale a partnership in a business known as ‘Bikini Girls Massage’. 

47                  In early December 2007, Mr Anzellino met with Mr Levi to discuss the business.  He agreed to purchase a 25% share in the business and on 11 December 2007 he electronically transferred $12,000 into an account which had been nominated by Mr Levi.  A week later Mr Anzellino electronically transferred another $54,000 into that account. 

48                  Once again, the Bikini Girls Massage business which Mr Anzellino purchased had never commenced and Mr Anzellino has never received any income from the business.  No monies have been paid or refunded to Mr Anzellino.  At no time was Mr Anzellino informed of the matters set out in par 11(d) of her Honour’s orders.  It follows, once again, that Mr Levi breached the requirement of par 11 of her Honour’s orders in relation to the sale of the supposed massage business to Mr Anzellino.

THE STATEMENT OF CHARGE

49                  On 13 June 2007, the ACCC filed the notice of motion in these proceedings and statement of charge in the Federal Court alleging that Mr Levi had been in contempt of court for breach of the orders of her Honour.  Initially the proceedings were filed in the Queensland Registry but on 27 July 2007 the proceedings were transferred to the Western Australia Registry. 

50                  On 10 August 2007, Siopis J made directions in relation to Mr Levi’s attempt to obtain legal aid.  Mr Levi had informed the Court that he proposed to seek a stay of proceedings on the basis that he expected to be unable to obtain legal representation. 

51                  On 30 October 2007, Mr Levi filed a notice of motion seeking to have these proceedings stayed pursuant to the principles in Dietrich v The Queen (1992) 177 CLR 292 (Dietrich application).  That Dietrich application was set down to be heard on 30 January 2008.

MR LEVI’S ANTECEDENTS

52                  On the same day that Kiefel J’s orders were made, Mr Levi was convicted in the Queensland District Court of four counts of wilful promise with intent to defraud and one count of misappropriation of monies with a circumstance of aggravation for which he was sentenced to 3 ½ years imprisonment suspended after one year and 25 days.  Mr Levi has also been imprisoned in the United States for three years for fraud offences.  He has been sentenced to at least two substantial periods, one of two years and one of two years and eight months of imprisonment for other fraud offences in South Australia.  He has previously been imprisoned for a period of three years by this Court for failing to pay a fine imposed upon him in respect of convictions of making misleading representations about business activities.  He has also been sentenced to a twelve month sentence in Western Australia for false pretences.  There is a similarity in all of those offences without needing to go back to his original criminal history which has been outlined below.

53                  The ACCC rely upon Mr Levi’s record of previous convictions and imprisonment for offences concerning dishonesty and other offences, but principally on the offences concerning dishonesty.  That record is as follows:

BANKRUPTCY

54                  Mr Levi had failed to meet a costs award of $38,000 made against him by Kiefel J in the proceedings which were the subject of her Honour’s orders.  On 15 June 2006, the ACCC commenced bankruptcy proceedings against Mr Levi in respect of that failure and on 27 September 2006, a sequestration order was made by this Court against Mr Levi.  The date of his bankruptcy was 26 July 2006.  This was about the time that Mr Levi left Queensland and commenced living in Perth, Western Australia. 

55                  In several cases, but not all, it has been held that in circumstances where a contemnor is bankrupt, a fine would be inappropriate, inadequate, or impossible.  To the extent those authorities include State courts it is to be noted that State courts may be affected by the operation of detailed sentencing legislation.  There is no such Act covering federal jurisdiction (see Re Colina; Ex parte Torney (1999) 200 CLR 386, as applied by Gray J in Pattison [2007] FCA 137 at [47]-[48], in determining the inapplicability of the sentencing principles contained in the Crimes Act 1914 (Cth)).  

56                  Decided in the Federal Court, Ambrose (trustee), Re; Athanasas (bankrupt) (No 2) [2008] FCA 1016is a case concerning a bankrupt person who repeatedly failed to produce documents on summons.  He pleaded guilty to failing to comply with statutory obligations to produce documents and failing to comply with an undertaking given to the Court by his then solicitor.  In determining whether a sentence of imprisonment was appropriate, Lander J stated (at [63]-[64]):

It is accepted that a sentence of imprisonment is a punishment of last resort. However, it is a punishment which must be imposed if it is necessary for the purpose of vindicating the Court’s authority.

In this case, Mr Athanasas is a bankrupt and it would seem to me that a fine would be inappropriate. Notwithstanding that imprisonment is a sentence of last resort, it seems to me, having regard to the conduct of Mr Athanasas over a very long period since the matter first came before the Registrar and since he first informed the Registrar he would comply with the summons, a sentence of imprisonment is necessary.

57                  His Honour also considered (at [65]-[66]) whether or not the sentence should be suspended:

Mr Telfer [counsel for Mr Athanasas] urged me to suspend the sentence on condition that Mr Athanasas produce the documents within a period specified in the condition. The difficulty with that submission is that he has no instructions that his client will produce the documents. I specifically asked him whether he was in a position to tell the Court whether Mr Athanasas would produce the documents to the Court at any time in the future. His instructions were that he had no such instructions.

It is necessary, in my opinion, to reassert the Court’s authority and, in those circumstances, I am not prepared to suspend the sentence of imprisonment.

58                  Mr Athanasas was accordingly sentenced to three months’ imprisonment.

59                  In Australian Prudential Regulation Authority v Siminton (No 3)(2006) 230 ALR 528 Merkel J considered principles relevant to the question of penalty for contempt, citing from his earlier reasons inLouis Vuitton Malletier SA v Design Elegance Pty Ltd (2006) 149 FCR 494. 

60                  In this case, the contemnor was an undischarged bankrupt.  Merkel J observed at 531:

There is no evidence that Siminton has any capacity to pay a fine and the interlocutory orders made in the proceeding prevent him from accessing any of the funds upon which he might otherwise lawfully draw upon to pay any fine.

In all the circumstances, the imposition of a fine on Siminton is not likely to have a significant effect upon him and, in any event, would be insufficient to vindicate the authority of the court in respect of the disposal contempts.

61                  In that case, there was no evidence that the contemnor had displayed any regret, remorse or contrition in respect of his contempts. His Honour observed at 532:

I accept that imprisonment should be a last resort but, having regard to the circumstances outlined above, I am in no doubt that in relation to the disposal contempts a term of imprisonment is both appropriate and necessary to vindicate the court’s authority. I regard personal deterrence as remaining a significant factor but I regard general deterrence as being of particular importance in the present case…

In my view, the object of general deterrence in the present case requires that a penalty be imposed that protects the effective administration of justice by demonstrating that the court’s orders cannot be disobeyed with impunity…

The court has a broad discretion as to penalty. Having regard to the factors set out above and the matters put forward by counsel on behalf of Siminton, the appropriate term of imprisonment for the disposal contempts is 10 weeks. I would add that had there been any prior contempt convictions, the penalty would have been significantly greater. I am also not prepared to accede to Siminton’s submission that any sentence of imprisonment should be suspended. In the present case, there are not sufficient mitigating circumstances to justify suspending the sentence.

62                  In Australian Prudential Regulation Authority v Siminton (No 11) [2007] FCA 1815 it had been found that the respondent had committed contempt of court by failing to pay a fine imposed on him by a Full Court within the time stipulated.  Tracey J outlined (at [8]) the considerations which were relevant to the determination of penalties for contempt including that:

·           Mr Siminton has not apologised, expressed regret or in any other way sought to purge his contempt.

·           Mr Siminton is an undischarged bankrupt who has failed to provide a statement of his affairs in accordance with the requirements of the Bankruptcy Act 1966 (Cth) and has not provided evidence of his personal and financial circumstances.

·           Mr Siminton claims to be impecunious.

·           Mr Siminton has a friend who might be disposed to provide an undisclosed amount of money to meet any fine which might be imposed by the court.

63                  His Honour accepted the District Registrar’s submission that the contempt is to be characterised as ‘very serious’, and found at [10]:

In the circumstances I do not consider that it is appropriate to impose a penalty other than a term of imprisonment. I have determined that an appropriate penalty is imprisonment for a term of four months.

64                  The respondent’s undischarged bankruptcy was apparently only one of several relevant considerations for declining to impose a fine. 

65                  In Capel v Caram Finance Australia Ltd [1998] QSC 110, Muir J considered the relevant principles relating to penalties for civil contempt.  Noting the unusual factual scenario in this case, Muir J stated:

The applicant submitted, in reliance on Director General of the Department of Fair Trading v Finnie (5.12.1997 Supreme Court of New South Wales, Graham A.J. unreported), that as the respondent is a bankrupt, a fine is an inappropriate penalty.

I accept that it would normally be inappropriate for a fine of any magnitude to be imposed on a bankrupt.

In this case though I find that, on the balance of probabilities, the respondent

·               could have produced the moneys required to meet the costs orders; and

·               could still purge his contempt by the payment of such moneys if he so desired.

I propose to give the respondent the option of paying a fine similar in amount to the moneys the subject of the undertakings. If he elects not to exercise that option or defaults in its performance, he will be imprisoned.

66                  This decision was reversed on appeal for different reasons (procedural requirements not being met) in Capel v CaramFinance Australia Ltd (formerly known as Marac Finance Australia Ltd)[2000] 2 Qd R 126.  

67                  In City Hall Albury Wodonga Pty Ltd v Chicago Investments Pty Ltd [2006] QSC 31 there were a number of contempts by the second defendants, who were bankrupt.  In determining punishment, Atkinson J stated (at [188]-[189]):

The breaches of the express undertakings and the creating of false documents which were disclosed as if they were genuine was a deliberate course of conduct which was engaged in for the most discreditable of reasons. The second defendants made undertakings to the court and then deliberately breached them for the purpose of avoiding the plaintiffs’ claim. The creation and disclosure of false documents was designed to mislead the plaintiffs and the court in such a way as to pervert the course of justice.

Because of the bankruptcy of the second defendants it is not possible to order a fine. In any event, contumacious breaches of undertakings given and the implied undertaking owed to the court not to disclose documents which have been falsely created for the purpose of disclosure require condign punishment by imprisonment rather than fine.

68                  The second defendants were sentenced to four and two months’ imprisonment (at [190]).

69                  However in Environment Protection Authority v Ableway Waste Management Pty Ltd [2005] NSWLEC 469 the New South Wales Land and Environment Court analysed the effect of the bankruptcy, concluding that a fine would be appropriate.  Lloyd J considered this question in some detail (at [35]-[46]) and observed (at [46]):

[A] fine imposed by the Court for an offence of contempt of court is a fine for “an offence against a law” within the meaning of s 82(3) of the Bankruptcy Act. It would follow that any fine imposed by the Court would not be provable in the bankruptcy. Neither would the Federal Court be empowered to make orders under s 60 of the Bankruptcy Act or to place any limit on the cCurt (sic) to punish the contemnor for his contempt.

70                  In relation to penalty, the Crimes (Sentencing Procedure) Act 1999 (NSW) was considered.  Lloyd J concluded (at [59]-[60]):

A term of imprisonment would achieve both the objectives of punishment and deterrence, but this would deprive Mr Tsaur of the opportunity of finding work so as to support his family. It seems, therefore, that a fine remains the most appropriate penalty. Moreover, since a fine for the punishment of contempt of court is not a provable debt in Mr Tsaur’s bankruptcy, then he will continue to remain personally liable for that debt. Section 6 of the Fines Act requires the Court to take into consideration Mr Tsaur’s means to pay. Although he is presently a bankrupt, he may not always be so. He is a proud man, anxious to support his family and he may well be able to find remunerative work in the future. The appropriate course is to impose a fine but postpone its operation so that it does not became payable until he is likely to have found his feet. In all the circumstances a fine of $50,000 is appropriate, which I reduce by 30% to take account of all mitigating factors that I have described. I will, however postpone the operation of the orders for the payment of the fine and costs in view of the fact that Mr Tsaur is clearly unable to pay at present.

71                  In Official Trustee in Bankruptcy v Pastro [2001] FCA 234, dealing with a bankrupt contemnor, Mansfield J observed that there was ‘nothing before me to indicate that any monetary penalty would serve any useful purpose’ (at [15]).  His Honour ordered the contemnor be imprisoned for a period of ten days if he did not, within 21 days, comply with the relevant order of the Court.

72                  In Pattison [2007] FCA 137, although not dealing with contempt by a bankrupt, this case considered the complex situation where a contemptor’s impecuniosity may prevent them from paying any fine and thus be sentenced to imprisonment in default of payment.  In relation to the appropriate orders to be made in this case, Gray J observed (at [60]):

I am of the view, however, that if Ms Bell does not pay the fine after having been allowed a substantial opportunity to acquire the money, I should impose a sentence of imprisonment in default of payment. If Ms Bell can find sufficient money to pay part of the fine, she should be given the benefit of a reduction in the default term of imprisonment commensurate with the payment she makes. I am aware that her impecuniosity may well prevent her from paying any fine. She is very likely to be made bankrupt in consequence of other orders I propose to make, particularly as to judgment against her and costs of the proceeding and of the contempt application. It can be said that to fine her with a default term of imprisonment is tantamount to imprisoning her directly. Bankruptcy would certainly put paid to any chance she might have of raising the money to pay the fine by borrowing, even assuming that she could find anyone to lend her money in her current circumstances. Nevertheless, I think that the order ought to involve imprisonment only in default of payment of the fine.

73                  His Honour also concluded, regarding the calculation of the fine and the determination of the period of imprisonment in default of payment (at [65]-[66]):

In determining the appropriate amount of a fine for contempt of court, it is necessary to have regard to the magnitude of the contempt. In a case such as the present, in which the contempt consists of a failure to pay a sum of money in a particular way, the amount of the money involved must be taken into account… In the present case, the fact that judgment will be given against Ms Bell for an appropriate amount, together with the fact that Ms Bell will be ordered to pay a substantial sum in legal costs, coupled with her impecuniosity and the consequent likelihood that she will be made bankrupt, suggests that a significantly lower fine is appropriate. In the circumstances, having regard to the seriousness of the contempt, the mitigating factors and the other orders I propose to make, the appropriate amount of a fine is $20 000.

The length of a sentence of imprisonment in default of payment of the fine is also a very difficult matter. There appears to be no uniformity of practice in this Court as to the relationship between the amount of a fine and the length of a term of imprisonment in default of its payment. By s 63(1) of the Sentencing Act 1991 (Vic), the relationship is fixed at one day’s imprisonment for each penalty unit or part of a penalty unit remaining unpaid, with a maximum of 24 months. The value of a penalty unit is currently fixed at $107.43, by notice in the Victoria Government Gazette no G14, dated 6 April 2006 at 680. For a fine of $20 000, if the appropriate length of a term of imprisonment were determined on this basis, the result would be approximately 186 days, or slightly over six months. I consider that to be excessive in the circumstances of this case.

74                  In Registrar of the Supreme Court of South Australia v Temple (No 3) [2000] SASC 199 (at [54]), the contemnor was bankrupt, although Perry J observed he was not satisfied that he had been given a completely frank account of the contemnor’s financial circumstances.  His Honour concluded (at [55]-[57]):

I accept that it is a basic principle to be borne in mind when imposing a penalty, whether in a criminal context or for contempt of court, that ordinarily it is not appropriate to impose a penalty of a kind or in circumstances where the immediate burden of it will fall on others apart from the defendant.

But in this case there are unusual circumstances which lead me to the view that it is proper to impose the punishment to which I will in due course refer, even although there is a possibility that Mr Temple's family may see to the payment of the amount which will have to be paid to avoid his imprisonment. I put it no higher than a possibility, in view of the doubts which I entertain as to the completeness of the information I have been given as to Mr Temple's financial resources.

Furthermore, the fact that Mr Temple may have to rely on others to assist him to meet the burden of the punishment, if that should in fact be the case, does not mean that Mr Temple will not have brought home to him the serious consequences of a failure to comply with an order of the court, which is the ultimate justification for punishment for contempt.

75                  A term of six months’ imprisonment was imposed, suspended on the condition that the contemnor repay $50,000 to his trustee in bankruptcy.

76                  In Westpac v Leith Gordon Bagshaw [1999] NSWSC 479, Dowd J observed (at [2]-[4]): 

The court is in the difficulty that the contemnor is an undischarged bankrupt who, although having initiated proceedings to set aside that discharge and having threatened those proceedings for sometime, still remains an undischarged bankrupt. He has given evidence before me that he is in a position to obtain some funds for the purpose of complying with any financial order which the court may make.

This is a matter where I have found the contempt to be wilful but have taken into account that the contemnor did not understand the serious consequences of failing to comply with this court's orders, notwithstanding that he was quite well aware of what he was doing.

This would in the normal course be a matter for the imposition of a fine of some considerable magnitude, but the court ought not make orders which are not likely to be complied with and are effectively impractical.

77                  In the circumstances, his Honour considered a fine or imprisonment to be inappropriate.  Instead, it was ordered that the contempt would be purged by the payment in full of the order for costs.

78                  The fact that a contemnor may be bankrupt is of greater significance when a fine would be an appropriate penalty.  However I consider the contempts in the current proceedings to have been particularly serious.  Were I disposed to impose a fine in lieu of imprisonment (and I am not), it would be for a sum substantially greater than the $10,000 that Mr Levi has said he may be able to borrow.  A fine in the case of these contempts is both inadequate and pointless. 

other business activities

79                  Mr Levi has received a total sum of $154,750 from the complainants.  No part of that sum has ever been repaid to any of the complainants. 

80                  As against that, since the orders were made by her Honour, Mr Levi has operated or proposed to operate a number of business opportunities through various trusts or purported trusts.  Those trusts or purported trusts have been:

(a)        Levi Gas Tech Invention Trust;

(b)        Australian AutoGas Trust;

(c)        Super Auto Gas Trust;

(d)        West Australian Hotel Trust;

(e)        Levi Energy Technology Trust;

(f)         Gardenia Trust;

(g)        Australian Massage Trust;

(h)        Australian Massage and Sauna Trust;

(i)         Prestige Trust; and

(j)         Prestige Auto Trust.

81                  The Bikini Girls Massage businesses were established.  In order that they could be operated, Mr Levi was responsible for setting up the Australian Massage and Sauna Trust and the Australian Massage Trust.  He was effectively in control of each of the trusts or purported trusts and ran the Bikini Girls Massage business in Western Australia at Applecross, Fremantle, West Perth and Northbridge.  He controlled the receipts, use and disposal of monies earned by the Bikini Girls Massage business.  Under each of those trusts, Mr Levi arranged to be the appointor which gives him the power to appoint and dismiss the trustees as he sees fit.  He caused the business name ‘Bikini Girls Massage and Sauna’ to be registered in his name with the Western Australian Department of Consumer and Employment Protection in October 2006. 

82                  By May 2007, however, Mr Levi ceased to be the registered holder of the business name ‘Bikini Girls Massage and Sauna’.  On that date, Ms Cherry Kaye Roza became the registered holder of the business name ‘Bikini Girls Massage’.  The evidence from Ms Roza is that Mr Levi asked her to become the registered holder of the Bikini Girls Massage business name so as to hide his involvement in the business.  At the same time, Mr Levi arranged to purchase and acquired an imported convertible sports car for his personal use.  He informed Ms Roza that he was maintaining a girlfriend in Sydney and sending her $1,000 a week.  He entertained regularly at the Raffles Hotel in Perth on funds which were acquired from the business receipts of the Bikini Girls Massage. 

MR LEVI’S CONDUCT IN RELATION TO THESE PROCEEDINGS

Stay of proceedings hearing

83                  On 30 January 2008, Siopis J heard what has been described as the Dietrich application.  On that occasion Mr Levi was represented by a solicitor and counsel.  His Honour delivered judgment on 14 February 2008 refusing the application on the basis that Mr Levi had failed to satisfy his Honour that he was, in truth, indigent (Australian Competition and Consumer Commission v Bon Levi [2008] FCA 68). 

Subsequent attempts to adjourn the contempt hearing

84                  On 20 February 2008 the ACCC filed and served an amended statement of charge.  The amendment included the conduct in relation to Mr Anzellino.  On 11 March 2008, Mr Levi again sought to have the contempt charges adjourned on the basis that he had no legal representation.  He sought an adjournment for a period of five months.  Once again Siopis J refused this application for an adjournment.  On the following day, Mr Levi engaged counsel to represent him.  On 8 April 2008, correspondence was forwarded by the Court to the parties advising that the matter had been listed for hearing for four days to commence on 10 June 2008. 

85                  Once again, on 7 May 2008, Mr Levi by his new solicitors made a further application to have the trial dates vacated.  Once again, and in the absence of a motion and supporting affidavits, this application was refused.  On 16 May 2008, a motion for adjournment was filed on behalf of Mr Levi.  On 28 May 2008, Siopis J refused the application to vacate the trial dates. 

86                  It was at that stage, on 30 May 2008 that Mr Levi informed the ACCC and the Court that he would plead guilty to five charges being the contempts in relation to Mr Sonego, Mr Thamorampillai, Mr and Mrs Jorgic, Mr Eaton and Mr Anzellino.  The ACCC abandoned the charge in relation to a Mr Da Silva. 

87                  The ACCC stresses in carefully prepared submissions:

(a)        that Mr Levi did not plead guilty until 30 May 2008 which was only 10 days prior to the commencement of the four day trial.  As the plea of guilty was only 10 days prior to the commencement of the trial, the ACCC was substantially prepared for the trial but it did save the expense of witnesses’ travel, accommodation and the need for the witnesses to testify was also avoided;

(b)        that until making his plea on 30 May 2008, Mr Levi had required all witnesses including those going to formal matters only, for cross-examination.  The ACCC prepared accordingly and presumably those witnesses made arrangements accordingly;

(c)        as late as 7 May 2008, Mr Levi was still causing distribution of brochures offering the sale of partnerships in Bikini Girls Massage businesses; and

(d)        the fact that Mr Levi has not expressed any contrition or remorse in relation to the loss suffered by the  complainants and as mentioned above has not made any reparation to them.

88                  In short, Mr Levi has pursued several attempts to delay the progress of the matter towards a hearing.  All of those attempts have failed.  At [23] of the judgment of Siopis J in the Dietrich application (Bon Levi [2008] FCA 68), his Honour found that over $180,000 had been paid into Mr Levi’s wife’s bank account between March and November 2007.  His Honour rejected the assertion that Mr Levi was indigent.  There is a suggestion in [21]-[24] of his Honour’s judgment that the lifestyle of Mr Levi could be reasonably described as extravagant. 

89                  The conduct of Mr Levi in relation to these proceedings is relevant as it underlines the recalcitrant approach which has been displayed to the Court and to its processes.  The ACCC submits that one can readily infer that the reason Mr Levi wanted the delay was to enable him as much time as possible to obtain more money from other unsuspecting ‘investors’ such as Mr Anzellino.  His conduct in advertising for ‘investors’ has continued as late as May 2008, almost 12 months after filing the contempt charges and shortly before they were due to be heard. 

THE NATURE OF THE CONTEMPT

90                  It is common ground that the contempts which have been committed are serious.  For Mr Levi, it is not accepted that, as submitted by the ACCC, it is difficult to envisage a more flagrant series of contempts than those committed by Mr Levi.  For the ACCC it is submitted that the nature of the actual contravening conduct is bad enough but when it is put into context of Mr Levi’s defiant approach to compliance with the orders of her Honour, the flagrancy is exacerbated. 

91                  The ACCC emphasises that it was immediately after the making of her Honour’s orders that Mr Levi continued with his practice of advertising diverse and geographically disparate enterprises which he had not previously operated.  Mr Levi’s response to inquiries by the ACCC through Mr Launder on 1 February 2006 was a response of belligerent aggression making wholly unfounded allegations against Mr Launder and against the ACCC.  A similar tone is evident in subsequent correspondence to which the Court was taken.  This correspondence was not only with the ACCC but also with the actual complainants.  Not only was Mr Levi belligerently defensive but he also made aggressive threats to the ACCC and the complainants in such correspondence.  The correspondence with the complainants is riddled with false statements.

92                  Mr Levi was apparently quite undeterred by the repeated warnings given to him by the ACCC.  Given the clarity of those warnings, there can be little doubt that Mr Levi was fully aware of the serious consequences if it was established that he was in breach of her Honour’s orders.  It is reasonable to infer that he took a number of steps calculated to conceal his conduct including having a business transferred into another person’s name, setting up various trusts to disguise his involvement, putting the proceeds of his contempts beyond the reach of the complainants and requesting one of the complainants (Mr Eaton) to lie about the timing of receipt of a copy of her Honour’s orders. 

93                  As an example, in relation to the usage of the Australian Massage Trust, Siopis J concluded at [24] of his 14 February 2008 judgment in the Dietrich application (Bon Levi [2008] FCA 68) that in relation to the Australian Massage Trust, it was Mr Levi and not the trustees who had in fact always been in control of all of the assets of the Bikini Girls Massage business since its inception including the disposal of all monies earned by the business. 

94                  The extraordinary lengths to which Mr Levi was prepared to go was demonstrated by the fact that the contravening conduct continued even well after the contempt proceedings were brought.  The notice of motion to punish the contempt and the statement of charge were filed on 13 June 2007 and served on Mr Levi shortly after that date.  The entire contempt concerning Mr Anzellino occurred months after the contempt proceedings were filed. 

95                  It is common ground that the contempts were serious but it also needs to be recognised that they were committed deliberately over a lengthy period of time in a concerted course of conduct.  Not only have there been no reparations paid to any of the complainants but given Mr Levi’s extravagant lifestyle and now bankruptcy, there is no reasonable basis for the complainants to expect that they are likely to recover the funds paid to him. 

96                  The particular orders made by her Honour were orders directed to protection of the public interests.  It was exactly the conduct which caused the financial loss to these complainants which her Honour had restrained.  There can be no mitigating factor going to the motive for the acts of contempt as the only factor which is evident is financial advantage to Mr Levi.  Furthermore, the conduct which her Honour had restrained and which has caused hardship to these complainants is conduct which Mr Levi has repeated over a long period of time.  There have been a number of convictions for fraud and fraud related offences. 

COMPARATIVE CASES

97                  Each of the ACCC and Mr Levi have referred me to a substantial range of cases in respect of which penalties have been imposed.  Several have been referred to above.  Palmer J, with whom I respectfully agree, observed in Michalik 52 ACSR 115 at [49] that ‘review of the punishments in other cases is of limited assistance, as each case really depends upon the Court’s assessment of the relevant facts’. 

98                  Of course imprisonment is very much a matter of last resort.  This statement is not a trite slogan.  One needs only to examine the history in this case to see how ineffective, at least, as a personal, if not as a general, deterrent, the previous several terms of imprisonment have been in relation to Mr Levi.  It may be for that reason that in the contempt cases pursued by regulators that imprisonment (without suspension) has been in the minority when compared with other forms of disposition. 

99                  Those cases in which imprisonment with or without a fine but without any complete suspension of the term of imprisonment have been ordered include the following, some having been addressed above:

·                    Australian Competition & Consumer Commission v Australian Taxation Information Services Pty Ltd [1999] FCA 1607 (3 months);

·                    Australian Competition and Consumer Commission v Hughes (t/as Crowded Planet) (2004) 207 ALR 116; and see Hughes v Australian Competition & Consumer Commission [2004] FCAFC 319 (6 months with 4 months suspended);

·                    Australian Competition and Consumer Commission v Goldstar Corporation Pty Ltd [1999] FCA 585 (6 months);

·                    Australian Securities & Investments Commission v Eagle Inter-Link Pty Ltd [2002] FCA 1524 (1 month);

·                    Australian Securities Commission v Macleod (No 3) (1993) 40 FCR 475 (4 months);

·                    Michalik 52 ACSR 115 (6 months);

·                    Australian Securities and Investments Commission v Reid (No 2) [2006] FCA 700 (9 months);

·                    Commissioner of Fair Trading, Department of Commerce v Jenness [2007] NSWSC 439 (6 months periodic detention);

·                    Commissioner for Fair Trading v Oliver [2004] NSWSC 722 (a total of 9 months in periodic detention); and

·                    Australian Prudential Regulation Authority v Siminton (No 10) [2007] FCA 1814 (12 months).

100               Amongst those cases there are cases in which the contempt has not been the first occasion of contempt and there have also been cases in which the defiance has been constituted not only in the contempt itself but also subsequently in the face of the court.  In submissions made most ably by Dr McMillan for Mr Levi it is submitted that neither of those factors applies to him.  I accept that submission. 

MITIGATING FACTORS

First contempt conviction

101               There was a departure between the parties on the question of whether the fact that Mr Levi has not previously been convicted of a contempt charge is a matter of significance.  This is a question on which reasonable minds may differ.  In my view, in the end it comes down to consideration of the nature of previous offences compared with the nature of the contempt. 

102               For the ACCC it is contended that Mr Levi has embarked upon a pattern of conduct which has rarely changed over some 20 years and that his lengthy criminal record makes it clear that nothing so far has been able to deter him from fraudulent activity. 

103               For Mr Levi, it is contended that in the exercise of the Court’s discretion, it would be unduly harsh for the Court to take into account the full record of Mr Levi (and on this point I think there is common ground) but specifically in the context of contempt it is stressed that he has had no previous convictions. 

104               In Louis Vuitton 149 FCR 494, Merkel J in listing relevant considerations identified ‘the absence or presence of a prior conviction for contempt’ (at [25]) as a relevant consideration for determining penalty.  His Honour went on to say, however, that other criminal history is irrelevant, citing R v Giscombe (1984) 79 CR APP R 79 at 84. 

105               The list of factors collected by Merkel J at [25] in Louis Vuitton,including the proposition that other criminal history is irrelevant, has been cited in a number of other cases including Siminton (No 10) [2007] FCA 1814, Australian Competition and Consumer Commission v Contract Plus Group Pty Ltd (in liq) (No 2) (2006) 232 ALR 364, Australian Competition and Consumer Commission v Hercules Iron Pty Ltd [2008] FCA 1182 and Scott & Ors v Evia Pty Ltd [2007] VSC 15. 

106               In this particular case, the proposition requires closer consideration.  The question falls squarely for consideration in the present case (but does not appear to have been of direct relevance in those other cases which have followed the factors listed by Merkel J in Louis Vuitton 149 FCR 494). 

107               The question for me is whether I should take into account previous criminal convictions in relation to conduct which is very similar to the conduct constituting the contempt in question. 

108               Certainly in Giscombe, the previous criminal history of the appellant was irrelevant but Giscombe was a case of contempt in the face of the court.  In that case, the appellant had appeared as a witness for the prosecution in an armed robbery trial.  He was an unwilling witness brought to the court in handcuffs.  He was declared hostile by the trial judge.  Thereafter, every afternoon during the trial he attended court and sat in the public gallery.  In the course of a police officer giving evidence for the prosecution, he stood up and shouted words to the effect that the police witness was a liar.  There were other acts of intervention with the jury in the trial.  The trial was aborted and he was charged with contempt and sentenced to four months imprisonment.  His appeal against the sentence was dismissed by the Court of Appeal.  At p 84 of the decision of the Lord Chief Justice, his Lordship said:

However as I think was submitted to us and we accept, in matters of this sort the nature of a man’s criminal record is of no importance, unless of course that criminal record contains an offence similar to the one of which he has been found guilty by this court, of which there is none in this case.  So we have to ask ourselves what is the proper term of imprisonment, because immediate imprisonment is undoubtedly necessary for what this man did.  (emphasis added)

109               It is the emphasised proviso which in my view is directly pertinent to the present case.  It is implicit in the proviso that in circumstances where previous convictions are ‘similar to’ the contempt under consideration, that such previous convictions may be taken into account.  In such a case, as in this case, there can be no question that the contemnor is aware of the seriousness of the conduct from previous consequences arising from it, yet has consciously proceeded with it in any event. 

110               In my view, the proviso has to be relevant in the conduct committed by Mr Levi.  The fraudulent and misleading sale of businesses on virtually a wholesale basis is ‘similar to’ conduct of which he has previously been convicted and sentenced to imprisonment. 

Plea of guilty and contrition

111               There is also something of a departure between the parties as to the weight to be given to the plea of guilty, given its lateness.  There is no evidence of any apology having been made to any of the complainants.  Indeed, such communication as there has been with the complainants, has been of an aggressive nature.

112               It is common ground that a plea of guilty is a mitigating factor and indeed for Mr Levi it is argued that a plea of guilty may be a mitigating factor even in the absence of a demonstration of contrition.  This approach is evident from Australian Securities and Investments Commission v Matthews (1992) 32 ACSR 404 at [30].  It is contended for Mr Levi that a plea of guilty should attract a significant discount in the penalty:  World Netsafe 133 FCR 279 at [19] and Globex Systems [2005] FCA 550 at [73]. 

113               The weight to be given to a plea will vary according to the circumstances but one of those circumstances is the time at which the plea is made.  For the ACCC it is contended that the extent to which there should be a discount for a plea would be much less than had the plea been made in a timely fashion shortly following the laying of the charges and without several other attempts having been made to postpone facing a contempt hearing. 

114               There can be no hard and fast rule on this topic.  I accept these factors are relevant.  Equally, in the present circumstances, I agree with counsel for Mr Levi that some discount should apply in light of the saving of time and costs that has resulted. 

115               While it is also common ground that an apology or contrition is an important factor to take into account, again there is disagreement as to whether the apology which has been made by Mr Levi through counsel, not by Mr Levi personally or on oath or directly to any of the complainants and which has been made after receipt of submissions from the ACCC pressing for a substantial period of imprisonment, should not be accorded great weight.  Mr Levi, however, submits that the Court should give substantial weight to both the expression of the apology and the unequivocal submission to the jurisdiction of the Court particularly in the context of assessing whether imprisonment is an appropriate remedy.  (Australian Competition and Consumer Commission v Purple Harmony Plates Pty Ltd (No 3) (2002) 196 ALR 576 at [53]). 

116               In my view the factors emphasised for Mr Levi do require reasonable, not negligible, weight to be given to the apology. 

117               It is also submitted for Mr Levi that when a court imposes an order for indemnity costs, as the ACCC seeks in these proceedings, such an order can be taken into account in determining the penalty.  The effect of an order for indemnity costs, Mr Levi submits, should be to reduce the penalty imposed:  Globex Systems [2005] FCA 550 at [87] and [89].  The ACCC does not disagree with that principle, but says that it is of no avail here as the bankruptcy of Mr Levi means that he will be unable to pay any order for indemnity costs.  Accordingly, it is submitted, the existence of such an order should not be taken into account to reduce the penalty which is imposed.  I accept the submission of the ACCC. 

118               It is submitted for Mr Levi that I should take into account the fact that he is 63 years of age, married with five adult children and three adult step-children.  His educational background is that he completed school to year 9 followed by a motor mechanics apprenticeship.  He is currently an undischarged bankrupt.  He takes medication for high blood pressure and is a diabetic.  In relation to the latter condition, there has been a loss of sensation in his feet with the prognosis that his condition is likely to deteriorate.  I agree that these factors are all relevant. 

119               I accept that the guilty plea must be taken into account.  I would give it greater weight had it been made in a timely fashion rather than shortly before the trial and after receipt of written submissions of the ACCC pressing for a lengthy period of incarceration. 

120               I accept that Mr Levi now acknowledges the seriousness of the contempts and that he unreservedly accepts the authority and jurisdiction of the Court and apologises for his failure to comply with her Honour’s orders.  Like Conti J in Australian Competition and Consumer Commission v Hughes [2004] FCA 519 at [34], I am also conscious of the susceptibility of a judicial officer to be beguiled by an offending party’s confessions of guilt in the context of susceptibility to significant prison sentences. 

121               For all those reasons, given that the choices I have in imposing a penalty which would include only imposition of a fine or a sentence of imprisonment or a combination of both, it is very difficult to conclude that suspension of a term of imprisonment would be sufficient penalty to deter Mr Levi from further contempts or to vindicate the authority of the Court.  He is unable to pay any fine other than possibly by borrowing $10,000 from his wife.  I accept the submission from the ACCC that a fine of $10,000 would be wholly inadequate to constitute an appropriate penalty in the circumstances, especially when it is paid by his wife.

122               As to Mr Levi’s criminal record, it is submitted that the Court should not take into account any part of his record prior to 1998.  In my view, the record (only of convictions for similar conduct) should be taken into account both in determining the appropriate penalty and in determining whether or not it is likely that Mr Levi would re-offend if any term of imprisonment was merely suspended.  I have already expressed my views on that likelihood.

123               As to the physical condition of Mr Levi, there is no evidence that he would not receive adequate medical attention if he were incarcerated.  I accept that his medical condition should be taken into account but not in determining whether or not there should be a term of imprisonment imposed but rather in relation to the extent of the term.

Psychological Report

124               There has also been tendered for Mr Levi a report of a clinical psychologist, Dr Merrett who expresses the view in his report that Mr Levi suffers from depression and his condition may be exacerbated by a term of imprisonment.  It is submitted that Mr Levi, albeit belatedly, has shown signs of remorse and entered pleas of guilty accepting responsibility as to all of the maintained charges.  It is submitted that such a plea should be a mitigating factor even in the absence of a demonstration of contrition and that a plea of guilty should attract a significant discount in penalty. 

125               As to the report from Dr Merrett, although Dr Merrett does consider that Mr Levi is experiencing ‘a number of symptoms consistent with the criteria for a Major Depressive Episode (Mild)’, he has not reached any conclusion that there is such a diagnosis established.  Much less has he reached a conclusion that there could not be treatment for such a condition if it were established. 

126               Aspects of the report are not particularly helpful for the submissions Mr Levi would make as to his contrition, his apology and recognition of the jurisdiction of the Court.  Indeed, there are aspects of the report which tend to reveal the personality which has given rise to these charges.  Dr Merrett reports Mr Levi accounting for the fact that Little Joe Snax had been promoted by him so widely that it became a national business with distribution centres in most States employing some 222 people.  That statement was untrue.

127               Mr Levi apparently reported to Dr Merrett that he believed he:

had complied with all legal requirements when establishing the distribution contracts, even opening a legal practice and employing a barrister to ensure he was compliant.  However, Mr Levi was accused by the Australian Competition and Consumer Commission (ACCC) of contravening sections of the Trade Practices Act and was instructed to cease trading, which he did.

The report goes on to explain that Mr Levi told Dr Merrett that he had sought legal advice from his solicitor to ensure that he was compliant with her Honour’s orders.  ‘He said the solicitor developed a new Distribution Document and a Solicitor’s Notice that he was instructed to provide to anyone who was considering engaging in business with him’.  This statement is not correct.  The document that was supplied did not satisfy the requirements of her Honour’s orders.  

128               The report continues:

Mr Levi reported that he had been candid with all potential purchasers and had directed them to the internet to find out about his well publicised history, however he recognises now that he failed to provide them with a written notice as required.  Mr Levi stated that he believed he was complying and that he had not intended to deceive any purchasers.  He said that despite certain legal guidance, he had been “careless” in not ensuring all the legal requirements of the ACCC and the Federal Court were met. 

129               I can fully accept that this is what Mr Levi told Dr Merrett.  Unfortunately what Mr Levi told Dr Merrett is far from accurate.  Mr Levi has accepted the agreed statement of facts, has not opposed the affidavits of the complainants nor sought to cross-examine them, all of which make it quite clear that he unequivocally lied to the complainants.  I can only conclude he did so in a systematic and deliberate fashion.  The reference to the internet to find out about his well publicised history is not referred to by any of the complainants and I do not accept that it was made. 

130               The report continues:

… Mr Levi stated that his current offences were not conducted deliberately to deceive, they were the result of his lack of understanding and carelessness as to his legal responsibilities. 

131               Once again, I fully accept that this is what Mr Levi told Dr Merrett.  Once again, it is far from the truth. 

132               I do not accept that he did not intend to deceive any purchasers.  The suggestion that he had only been ‘careless’ cannot be accepted. 

133               The report continues that Little Joe Snax, a manufacturing and distribution business, was employing 222 staff, had 5000 customers and a multimillion dollar turnover.  Again, I fully accept that this is what Mr Levi reported to Dr Merrett.  I can place no weight in the statement that Little Joe Snax had a multimillion dollar turnover.  There is no evidence in any of the materials which would support that.  To the contrary, the inference one would draw from reading Dr Merrett’s report is that Mr Levi was simply unable to revert from falling back into his usual character in the course of this consultation. 

134               On the crucial question of whether or not in the opinion of Dr Merrett, Mr Levi would be likely to re-offend, Dr Merrett understandably was unable to express a view.  To that question he expressed the opinion that:

Mr Levi reported that his past offending behaviour was primarily due to “carelessness” as he did not attend to all aspects of his Federal Court orders.  Mr Levi reported that he is not likely to make a similar mistake in the future.  I am unable to predict whether Mr Levi will re-offend in any other respect in the future.  However based on Mr Levi’s reported deteriorating health and his increasing age, it is suggested that he may be less inclined to engage in entrepreneurial pursuits in the future, which will decrease the opportunity for him to breach legislation.

135               As to Mr Levi’s mental condition, the report from Dr Merrett, in my view, is of very limited value.  I say this without, of course, intending any disrespect to Dr Merrett but he was clearly not an ongoing treating clinical psychologist.  He was engaged for the purpose of preparing a report in relation to mitigation.  He quite properly relied on what he was told. 

THE APPPROPRIATE PENALTY

136               For Mr Levi’s submission that a suspended sentence would be appropriate, reliance is placed on Purple Harmony Plates (No 3) 196 ALR 576 in which the second respondent was sentenced to a term of imprisonment for contempt of court.  After serving that term, the second respondent then proceeded to commit further contempts, and remained unrepentant in the face of the court.  All of this, notwithstanding, it is said, the court allowed the second respondent to avoid a term of imprisonment as an order was made for the warrant for his committal to prison for one month to issue and to lie in the registry.  It was not to be executed provided that he complied with a number of conditions, one of which included refraining from engaging in the conduct in question in the future. 

137               The ACCC submit that the circumstances of the case call for a substantial period of imprisonment of two to three years.  The specific fact supporting that disposition of the matter is said to be that his conduct was not only deliberately contrary to the requirements of her Honour, Kiefel J’s orders but was undertaken with a clear (and successful) view to making a profit from unsuspecting members of the public in the very manner her Honour sought to prevent.  This conduct was repeated over a substantial period of time.  He has endeavoured to delay the proper progress of these proceedings and while doing so has continued to act in contempt of her Honour’s orders.  He has shown no genuine remorse, it is said and it is clear that any remorse which he might now express is simply expressed with a view to minimising his ultimate sentence and not in a way which is genuinely contrite. 

138               Reliance is also placed on the fact that Mr Levi has a long history of fraudulent conduct and has spent significant periods of time in prison for fraud related offences.  He has acted in absolute defiance of the Court and its orders.  

139               In those circumstances it is submitted that the appropriate sentence, taking into account the late plea of guilty, is between two and three years imprisonment with half of the head sentence being suspended for a period of five years on conditions that during that period:

(a)        Mr Levi not sell, advertise or promote for sale or accept any payment or part payment for any business opportunity whatsoever;

(b)        that Mr Levi not knowingly participate in other persons conducting such activity; and

(c)        that he be generally of good behaviour and not breach any requirements of the criminal law. 

140               I am disinclined to impose (c) as a condition.  The facts admitted and the antecedents relied upon pertain to activity concerning false representations pertaining to businesses.  The conditions set should be similarly and more precisely confined in the present instance.

141               I also consider that a simple blanket imposition of straightforward conditions is appropriate, subject to Mr Levi being permitted to approach the Court to seek leave to depart from the conditions.  I do not intend to purport, given the history, that leave would be granted lightly. 

142               The ACCC contend that if Mr Levi is simply released from custody at the end of any custodial sentence, he will simply go straight back to old habits.  A partly suspended sentence of imprisonment would be the best way to achieve the end sought by the process of imposing a penalty for the contempts.  I consider that there is merit in this submission. 

143               The ACCC also seek an award of costs on an indemnity basis.  It is relatively common in cases of contempt where proceedings have had to be brought to vindicate the authority of the Court and to uphold the public interest in the administration of justice to order costs on an indemnity basis particularly where the proceedings are brought by the ACCC in prosecution of its charter to act in the public interest (Australian Competition and Consumer Commission v Dynacast (Int) Pty Ltd [2007] FCA 429 at [89]).

CONCLUSION

144               The terms of her Honour’s injunction, while detailed, were clear and unambiguous.  No suggestion is made to the contrary by way of any submission for Mr Levi.  Clearly Mr Levi had proper notice of the terms of the injunction and warnings.  The breaches of the injunction are admitted.  Mr Levi’s acts were deliberate.  The acts and omissions were not accidental.  The conduct concerned was repeated, serious and flagrant and Mr Levi gained substantial financial benefits as a result of the repeated contempts.  In addition to this, the complainants who were the subject of the behaviour constituting the contempts have suffered loss of funds, loss of assets, frustration and wasted time as a result of Mr Levi’s contemptuous conduct.  He has shown little remorse for his contempt.  His late pleas of guilty came only when it was clear that the ACCC was pressing for a substantial period of imprisonment.  Mr Levi has a significant record for similar conduct in the past for which he has also been punished. 

145               In summary, the ACCC has contended for a sentence of imprisonment of 2-3 years with a suggestion that there be a discount subject to conditions (broadly similar to those imposed by Kiefel J) applying for a period of some 5 years.  Dr McMillan has stressed reasons why it would be appropriate for the Court to impose a suspended sentence in this instance.

146               All matters considered, I would have thought that the lower end of the scale advanced by the ACCC might be a starting point in light of the conclusions reached.  From there one would need to consider factors in mitigation and the question of suspension of a sentence or the imposition of a fine.  As previously observed, the latter course is pointless as there is no capacity to meet the fine. 

147               There is no reported contempt case in the Federal Court where the term of imprisonment imposed has reached the length suggested by the ACCC.  On the other hand, it is true that when Mr Levi was known as Mr Farrow, he served the best part of 3 years in prison for failure to pay fines which he was ordered to pay in respect of conduct very similar to that which constituted these contempts. 

148               Taking as a starting the point the lower of the ACCC’s suggested period of sentence, (two years) as against that I would take the following matters into account in mitigation and reduction.  First, notwithstanding that it was late, I would certainly take into account the guilty pleas.  I would then take into account a variety of factors including his age and health difficulties.  In relation to each of the contempt convictions, I would reduce the head sentence to 10 months but subject also to a condition that after serving 4 months of that sentence, the balance of the sentence be suspended subject to compliance for 5 years with conditions. 

149               I will therefore declare and order as follows:

THE COURT DECLARES THAT:

The first respondent, Mr Bon Levi is guilty of contempt of this Court in that in breach of the orders made on 28 February 2005 by Justice Kiefel the first respondent, Mr Bon Levi engaged in the conduct set out below:

1.                  In relation to Mr Paul Gerard Sonego:

1.1       between December 2005 and February 2006, selling a distributorship or other business opportunity, being a snack-food distributorship business, to Mr Paul Gerard Sonego (the Sonego business);

1.2       on or about 28 December 2005 accepting payment of $2,145 from Mr Sonego for the Sonego business; and

1.3       on or about 1 February 2006 accepting payment of $19,305 from Mr Sonego for the Sonego business;

without either:

1.4       the first respondent, his servants or agents having successfully conducted the Sonego business for at least 6 months prior to it being offered for sale, or at all; or

1.5       notifying Mr Sonego, either at least 7 days prior to entering into a binding agreement with Mr Sonego or at all, in writing of any of the matters set out in paragraph 11(d) of the orders.

2.                  In relation to Mr Vinko Jorgic:

2.1       on or about 9 March 2006, selling a distributorship or other business opportunity, being a snack-food distributorship business, to Mr Vinko Jorgic (the Jorgic business):

2.2       on or about 9 March 2006 accepting payment of $2,180 from Mr Jorgic for the Jorgic business; and

2.3       on or about 28 March 2006 accepting payment of $19,270 from Mr Jorgic for the Jorgic business

without either:

2.4       the first respondent, his servants or agents having successfully conducted the Jorgic business for at least 6 months prior to it being offered for sale, or at all; or

2.5       notifying Mr Jorgic, either at least 7 days prior to entering into a binding agreement with Mr Jorgic or at all, in writing of any of the matters set out in paragraph 11(d) of the orders. 

3.                  In relation to Mr Thiyagarajah Thamorampillai:

3.1       in or about March 2006 to May 2006, selling a distributorship or other business opportunity, being a snack-food distributorship business, to Mr Thiyagarajah Thamorampillai (the Thamorampillai business);

3.2       on or about 3 April 2006 accepting payment of $1,950 from Mr Thamorampillai for the Thamorampillai business; and

3.3       on or about 1 May 2006 accepting payment of $19,500 from Mr Thamorampillai for the Thamorampillai business;

without either:

3.4       the first respondent, his servants or agents having successfully conducted the Thamorampillai business for at least 6 months prior to it being offered for sale, or at all; or

3.5       notifying Mr Thamorampillai, either at least 7 days prior to entering into a binding agreement with Mr Thamorampillai or at all, in writing of any of the matters set out in paragraph 11(d) of the orders. 

4.                  In relation to Mr John David Eaton:

4.1       on or about 17 August 2006, or alternatively on or about 26 August 2006, selling a partnership or other business opportunity, being a partnership for a gas conversion business, to Mr John David Eaton (the Eaton business);

4.2       on or about 17 August 2006 accepting a part payment in the amount of $4,400 from Mr Eaton for the Eaton business;

4.3       on or about 5 September 2006 accepting a part payment in the amount of $20,000 from Mr Eaton for the Eaton business;

without either:

4.4       the first respondent, his servants or agents having successfully conducted the Eaton business for at least 6 months prior to it being offered for sale, or at all; or

4.5       notifying Mr Eaton either at least 7 days prior to entering into a binding agreement with Mr Eaton or at all, in writing of any of the matters set out in paragraph 11(d) of the orders.

5.                  In relation to Mr Justin Charles Anzellino:

5.1       on or about 11 December 2007 knowingly participating in the sale by the Australian Massage Trust, or the Australian Therupetic Massage Trust, of a partnership or other business opportunity, being a partnership for a massage business to be operated at Osborne Park, Western Australia, to Mr Justin Charles Anzellino (the Anzellino business);

5.2       on or about 11 December 2007 knowingly participating in the acceptance by the Australian Massage Trust, or the Australian Therupetic Massage Trust, of a part payment in the amount of $12,000 from Mr Anzellino for the Anzellino business;

5.3       on or about 18 December 2007 knowingly participating in the acceptance by the Australian Massage Trust, or the Australian Therupetic Massage Trust, of a part payment in the amount of $54,000 from Mr Anzellino for the Anzellino business;

without either:

5.4       the first respondent, his servants or agents or the Australian Massage Trust, or the Australian Therupetic Massage Trust, having successfully conducted the Anzellino business for at least 6 months prior to it being offered for sale, or at all; or

5.5       notifying Mr Anzellino either at least 7 days prior to entering into a binding agreement with Mr Anzellino or at all, in writing of any of the matters set out in paragraph 11(d) of the orders.

THE COURT ORDERS THAT:

1.                  The first respondent be imprisoned for a period of 10 months commencing from today, with the first 4 months being served in any event.

2.                  The balance of the sentence of 10 months will be suspended from execution upon the basis that if the first respondent within a period of 5 years from today, breaches the following conditions, the provision for suspension shall operate so that the first respondent must there upon be imprisoned for at least the remainder of the 10 month period not served, namely, the residual period of 6 months, the conditions being:

(a)        the first respondent not, without leave of this Court first being obtained:

·                    sell; or

·                    advertise or promote for sale; or

·                    accept any payment or part payment for;

any business opportunity whatsoever.

(b)        the first respondent not, without leave of this Court first being obtained knowingly participate in any other person or entity:

·                    selling; or

·                    advertising or promoting for sale; or

·                    accepting any payment or part payment for;

any business opportunity whatsoever.

The expression ‘business opportunity’ includes, but is not limited to, any franchise, training business, distributorship, manufacturing licence, partnership, import or export licence, purchasing or operating licence, marketing agreement or other business opportunity howsoever described. 

3.                  The first respondent is to pay the applicant’s costs of and incidental to this application on an indemnity basis.  That is to say, all of the applicant’s costs in these proceedings be paid in full by the first respondent except to the extent that those costs are shown to have been unreasonably incurred. 

Associate:

Dated:         24 October 2008