FEDERAL COURT OF AUSTRALIA

Textile Clothing and Footwear Union of Australia v Morrison Country Clothing

Australia Pty Ltd (No 2) [2008] FCA 1965

CONTEMPT – Penalty hearing – considerations relevant to penalty – contempt found to be wilful – fine imposed

Federal Court of Australia Act 1976 (Cth) s 31

Australian Competition and Consumer Commission v Dynacast (Int) Pty Ltd (2007) ATPR 42-156 referred to

Australian Competition and Consumer Commission v Hughes (2001) ATPR 41-807 referred to

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

Australian Competition and Consumer Commission v World Netsafe Pty Ltd (2003) 204 ALR 537 referred to

BHP Steel (AIS) Pty Ltd v Construction, Forestry, Mining and Energy Union [2001] FCA 336 referred to

Gregory v Philip Morris Ltd (1987) 74 ALR 300 referred to

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

National Union of Workers v Davids Distribution Pty Ltd (1999) 91 FCR 513 referred to

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

Real Tech Systems Integration Pty Ltd v Meuross (1998) 82 FCR 150 referred to

Siminton v Australian Prudential Regulation Authority (2006) 152 FCR 129 referred to

Textile Clothing and Footwear Union of Australia v Morrison Country Clothing Australia Pty Ltd [2008] FCA 604 referred to

Textile Clothing and Footwear Union of Australia v Southern Cross Clothing Pty Ltd [2006] FCA 325 referred to

Welfare v Birdon Sands Pty Ltd (1997) 79 FCR 220 referred to

TEXTILE CLOTHING AND FOOTWEAR UNION OF AUSTRALIA v MORRISON COUNTRY CLOTHING AUSTRALIA PTY LTD (ACN 076 740 826)

VID 1212 of 2006

TRACEY J

23 DECEMBER 2008

MELBOURNE

THE COURT ORDERS THAT:

1.                  It be declared that the respondent is guilty of contempt by reason of its failure to give discovery of the documents requested by the applicant by serving a list of documents required to be disclosed and an affidavit verifying the list of documents on or before 19 October 2007 or at all, in breach of paragraph 1 of the orders of Tracey J made on 28 September 2007.

2.                  It be declared that Mr Brian Morrison is guilty of contempt by reason of his failure to give discovery of the documents requested by the applicant by serving a list of documents required to be disclosed and an affidavit verifying the list of documents on or before 19 October 2007 or at all, in breach of paragraph 1 of the orders of Tracey J made on 28 September 2007.

3.                  A penalty of $10,000.00 be imposed on Mr Brian Morrison. 

4.                  If Mr Morrison files and serves an affidavit of documents, which complies with paragraph 1 of the Orders of Tracey J made on 28 September 2007, within 30 days of the date of these orders, the penalty imposed in paragraph 3 of these orders be reduced from $10,000.00 to $5,000.00.

5.                  Subject to paragraph 4 of these orders, the penalty imposed in paragraph 3 of these orders be paid into the Consolidated Revenue Fund within 60 days.

6.                  Mr Brian Morrison pay the applicant’s costs of the notice of motion dated 22 November 2007 on an indemnity basis.    

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using eSearch on the Court’s website.

REASONS FOR JUDGMENT

1                     On 5 September 2008 I found that the respondent, Morrison Country Clothing Australia Pty Ltd (“Morrison Clothing”), and Mr Brian Morrison had committed contempt of Court by failing to comply with paragraph 1 of the orders I made on 28 September 2007 (“the Order”): see Textile Clothing and Footwear Union of Australia v Morrison Country Clothing Australia Pty Ltd [2008] FCA 604.   These reasons should be read in conjunction with those in Morrison.

2                     Mr Morrison is the sole director, company secretary and sole shareholder of Morrison Clothing.  The Order required Mr Morrison, both on his own behalf and on behalf of Morrison Clothing, to give discovery of the documents requested by the applicant (in its Request for Categories of Documents to be Discovered dated 9 August 2007) by serving a list of documents required to be disclosed and an affidavit verifying the list of documents on or before 19 October 2007.  I concluded that the brief affidavit filed by Mr Morrison did not comply with the Order and that Mr Morrison’s conduct was not merely casual, accidental or unintentional but constituted wilful disobedience of the Court’s order.

3                     The applicant seeks an order that Mr Morrison be fined $50,000.00 for his contempt.  No penalty is sought against Morrison Clothing, which is now in liquidation.   

4                     It is now well established that the Court has power to impose a fine for contempt of Court: see s 31 of the Federal Court of Australia Act 1976 (Cth) and Pattison (Trustee), in the matter of Bell (Bankrupt) v Bell [2007] FCA 137; BHP Steel (AIS) Pty Ltd v Construction, Forestry, Mining and Energy Union [2001] FCA 336; Australian Competition and Consumer Commission v Dynacast (Int) Pty Ltd (2007) ATPR 42-156; Siminton v Australian Prudential Regulation Authority (2006) 152 FCR 129.

5                     In Australian Competition and Consumer Commission v Hughes (2001) ATPR 41-807 Tamberlin J described the rationale behind the power to punish for contempt as follows:

“Ultimately, in the case of mandatory or prohibitory orders made by it, the sanction which the Court has in order to enforce its decisions is the power to punish for contempt.  This is the way in which the Court preserves respect for its role and the rule of law.  Without the enforcement of court orders the whole process of adjudication becomes a hollow exercise.  If a losing party can defy the orders of the Court then such disobedience renders futile, in the perception of the community, the remedy secured by the successful party.  Orders are not made simply to suggest or advise persons that they ought to keep to the law as proclaimed but to ensure that the law is carried out as determined by the decision pursuant to which the order is made.  Defiance of court orders diminishes the authority of courts and removes the incentive of parties, if such conduct is left unpunished, to comply with the requirements of the courts.”

6                     Having regard to these principles I turn to the determination of the appropriate penalty.

PENALTY

7                     In Louis Vuitton Malletier SA v Design Elegance Pty Ltd (2006) 149 FCR 494, Merkel J identified the following considerations as being relevant to the determination of an appropriate penalty for contempt of Court (at 501-502):

·                    The contemnor’s personal circumstances;

·                    The nature and circumstances of the contempt;

·                    The effect of the contempt on the administration of justice;

·                    The contemnor’s culpability;

·                    The need to deter the contemnor and others from repeating contempt;

·                    The absence or presence of a prior conviction for contempt;

·                    The contemnor’s financial means;

·                    Whether the contemnor has exhibited general contrition and made a full and ample apology;

·                    Whether the conduct falls within the most serious category of criminal contempt cases such as to warrant the imposition of a term of imprisonment; and

·                    Whether or not imprisonment is a “last resort” penalty in the circumstances of the case.

See also Australian Competition and Consumer Commission v INFO4PC.com Pty Ltd (2002) 121 FCR 24 at 54; Australian Competition and Consumer Commission v World Netsafe Pty Ltd (2003) 204 ALR 537 at 540.

8                     The findings of contempt followed a pattern of disregard for the Court’s orders by Mr Morrison and Morrison Clothing. Notably Morrison Clothing has failed to file a defence, in defiance of an order of the Court that it do so. It has failed to appear at four directions hearings and two Court-ordered mediations. The contempt hearing was adjourned from November 2007, to December 2007, and then to February 2008 for the benefit of Mr Morrison and Morrison Clothing. Despite this, Mr Morrison and Morrison Clothing did not appear at the hearing in February, nor was any material filed on behalf of Mr Morrison or Morrison Clothing.  The matter was finally heard in April 2008. Mr Morrison appeared on his own behalf and on behalf of Morrison Clothing. During the hearing Mr Morrison was permitted to give oral evidence.  He denied that he or Morrison Clothing were in contempt and offered no apology.

9                     Mr Morrison was solely responsible for the company’s failure to comply with the Order. He has taken no steps to purge the contempt.     

10                  A penalty hearing was held on 10 October 2008. Again, Mr Morrison did not appear; nor did anyone appear on behalf of Morrison Clothing.  No material was filed on behalf of Mr Morrison or Morrison Clothing.  While the Court is aware that Morrison Clothing is in liquidation, the Court has no knowledge of Mr Morrison’s personal circumstances or his financial means. The Court is not aware of any prior convictions of Mr Morrison or Morrison Clothing.

11                  In my view, the failure by Mr Morrison to comply with the Order and the lack of any contrition on the part of Mr Morrison assumes particular significance in light of the subject matter of the principal proceeding and the effect of the contempt on the administration of justice.   

12                  In the principal proceeding, the applicant sought the imposition of penalties against Morrison Clothing pursuant to s 719 of the Workplace Relations Act 1996 (Cth) (“the WR Act”) for breaches of clauses 46 and 48 of the Clothing Trades Award 1999. Clauses 46 and 48 regulate the terms and conditions of outworkers. The Award is intended to regulate the use of outworkers in the clothing industry to ensure that outworkers receive their minimum entitlements.  The relevant provisions of the Award were specifically designed to remedy the exploitation of this vulnerable group of workers: see Clothing Trades Award 1982 Print R2749 and cf the observations of Marshall J in Textile Clothing and Footwear Union of Australia v Southern Cross Clothing Pty Ltd [2006] FCA 325.

13                  The applicant claimed, inter alia, that Morrison Clothing had utilised outworkers but had not provided the minimum wages and conditions provided for in the Award or kept all of the requisite work records. The work records of Morrison Clothing are essential for the applicant to prove its case. The failure of Mr Morrison to provide discovery of the work records has severely limited the ability of the applicant to continue the proceedings. As the applicant submits, if Mr Morrison is permitted to ignore the Order he is able to circumvent the outworkers’ regulatory regime. In those circumstances, and particularly in light of the objectives of that regime, the amount of the penalty should be sufficient to deter Mr Morrison and others from conduct designed to circumvent the legislative protections which are provided for outworkers.  

14                  For the forgoing reasons, I consider that it is appropriate that Mr Morrison be fined $10,000.00.

15                  During the penalty hearing, I raised with counsel for the applicant whether any penalty imposed against Mr Morrison might be lessened if Mr Morrison provided discovery within a specified time frame. The applicant opposed this course of action. Nonetheless, I am prepared to give Mr Morrison one final opportunity to purge his contempt by making discovery. I propose that he should be given a period of 30 days from the date on which the order is pronounced to purge his contempt by filing a comprehensive affidavit of discovery in accordance with the Order which remains in force.  If he files such an affidavit within the time prescribed, the amount of the fine will be reduced. If he does not purge his contempt in this manner, Mr Morrison will be required to pay the full amount of the fine imposed.

Costs

16                  The applicant seeks its costs of its motion for contempt dated 22 November 2007 on an indemnity basis on the ground that it brought the application to vindicate the authority of the Court. The Courts have recognised that parties who prosecute contempt proceedings are performing a public duty and that it is appropriate that a costs order be made so they are not out of pocket: see BHP Steel (AIS) Pty Ltd v Construction, Forestry, Mining and Energy Union [2001] FCA 336.

17                  As the principal proceeding was a matter arising under the WR Act it is necessary to consider whether the contempt proceeding was also a matter arising under that Act, in which case s 824 would prevent the Court from ordering Mr Morrison and/or Morrison Clothing from paying the applicant’s costs of the motion. It is well established that a motion for contempt is separate and distinct from the principal proceeding: see Real Tech Systems Integration Pty Ltd v Meuross (1998) 82 FCR 150 at 151 referring to O’Shea v O’Shea (1890) 15 PD 59. In National Union of Workers v Davids Distribution Pty Ltd (1999) 91 FCR 513 the National Union of Workers appealed against a finding of contempt by Smart J of the Supreme Court of New South Wales. A Full Court of this Court said (at 522 – 523) that the contempt proceeding was not a matter arising under the WR Act, and therefore s 347 (the predecessor of s 824) did not stand in the way of a costs order. See also Welfare v Birdon Sands Pty Ltd (1997) 79 FCR 220 at 235 and Gregory v Philip Morris Ltd (1987) 74 ALR 300 at 308. It is clear on the authorities that s 824 of the WR Act does not apply to contempt proceedings.   

18                  In my view, the costs order proposed by the applicant is appropriate in the circumstances of this case.

Associate:

Dated:         23 December 2008