FEDERAL COURT OF AUSTRALIA

Pennicott Wilderness Journeys Pty Ltd v Tasmanian Cruises

and Charters Pty Ltd (in liquidation) [2013] FCA 932 

THE COURT ORDERS THAT:

1.    The proceeding is adjourned to 2.15 pm on Monday, 23 September 2013 by video link to Hobart to hear submissions on penalties and costs, subject to the matter raised at paragraph 39 in the accompanying reasons for judgment.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    On 23 August 2012, the Court made orders by consent to resolve the substantive proceeding in this matter. The applicant (“Pennicott”) contends that the respondent and its officers, Mr Kevin Pearce and Ms Carol Jeffrey, breached those orders. It applied for orders for the committal of Mr Pearce and Ms Jeffrey and for the sequestration of the property of the respondent which was then called “Bruny Island Adventure Cruises Pty Ltd”.

2    Pennicott relies on an amended interlocutory application dated 30 November 2012. Prior to that time, Mr Pearce and Ms Jeffrey had been served with the consent order which contained the endorsement required by r 41.06 of the Federal Court Rules 2011 advising of the possible consequences of failure to comply with the order. The evidence disclosed that Mr Pearce was aware of the consent order and its terms from its making on 23 August 2012 and that Ms Jeffrey was aware of the consent order and its terms, at least from 26 August 2012. The consent order is annexed to these reasons and marked “ANNEXURE A”.

3    On 24 January 2013, the respondent was wound up voluntarily and a liquidator was appointed. On 28 March 2013, the Court refused leave to Pennicott to proceed against the respondent company in liquidation; see Pennicott Wilderness Journeys Pty Ltd v Bruny Island Adventure Cruises Pty Ltd (in liquidation) [2013] FCA 282.

4    On 6 and 7 August 2013, Pennicott pressed its application against Mr Pearce and Ms Jeffrey pursuant to r 41.08 of the Federal Court Rules 2011. Rule 41.08(1) provides:

If a person fails to comply with an order that the person is bound to comply with a party may apply to the Court for the following orders:

(a)    the committal of the person;

(b)    the sequestration of the person’s property.

5    Below, the Court deals with the paragraphs of the orders alleged to have been breached by Mr Pearce and Ms Jeffrey. Before doing so, it discusses the position of Mr Pearce and Ms Jeffrey in the former business of the respondent.

Mr Pearce and Ms Jeffrey

6    The respondent conducted a tourism business in Southern Tasmania operating cruises around Tasman Island from late 2009. At all material times, Ms Jeffrey was the sole director and secretary of the respondent and its sole shareholder. She had primary legal responsibility for its affairs including compliance with court orders. Mr Pearce was delegated responsibility by Ms Jeffrey for the day-to-day management of the respondent’s business. Mr Pearce made all decisions required in the operation of the respondent.

7    For current purposes, Mr Pearce and Ms Jeffrey can be considered the human actors who performed functions on behalf of the respondent and were bound to ensure its compliance with the consent order.

8     Mr Pearce and Ms Jeffrey allege that the respondent company ceased to conduct the business it previously conducted as from 16 October 2012 when the business was sold. Pennicott argues that 27 November 2012 was the actual “handover date”. Pennicott has pointed to other evidence which suggests the “handover” occurred at the end of October 2012. The evidence on this issue is unclear. As the assets of the business were transferred on 16 October 2012, the Court cannot be satisfied beyond reasonable doubt (in the absence of other compellingly clear evidence) that the respondent conducted the business beyond that date. If the respondent did not conduct the business beyond that date, Mr Pearce and Ms Jeffrey cannot be considered to have committed a contempt of court by failing to comply with the consent order on behalf of the respondent, in relation to the period beyond 16 October 2012.

Alleged breaches of the CONSENT order

The law

9    Contempt of court involves knowing and deliberate rather than accidental conduct in breach of court orders. Charges of contempt, whether civil or criminal, must be proved “beyond reasonable doubt”; see Louis Vuitton Malletier SA v Design Elegance Pty Ltd (2006) 149 FCR 494 at 497-498 per Merkel J. The Court exercises its power to punish cases of contempt to uphold its authority and the rule of law.

Paragraph 1

10    Paragraph 1 of the consent order required that six weeks from the date of the order (ie by 4 October 2012) the respondent permanently stop using the following names:

    Tasman Island Adventure Cruises;

    Tasman Island Adventure Cruises Pty Ltd;

    Tasman Island Cruise;

    Tasman Island Cruises;

    Bruny Island Adventure Cruises; and

    Bruny Island Adventure Cruises Pty Ltd.

11    Between 4 October and 16 October 2012, the respondent used the names appearing at the first, third and final dot points set out in the preceding paragraph on its website and on tourism websites and listings. Mr Pearce, under cross-examination, did not dispute that the respondent used the words “Tasman Island Adventure Cruises” on its website on 5 October 2012 in breach of paragraph 1 of the consent orders.

12    Mr Pearce said he made no effort to deal with the website in the six week period from the making of the consent order until 4 October 2012. He gave evidence that on the morning of 8 October 2012, he instructed the respondent’s website designer to alter the website to comply with the consent order.

13    Mr Pearce admitted that the website is a large part of what the respondent relied on for custom.

14    In written submissions for Mr Pearce and Ms Jeffrey, Mr Pearce accepts that the company’s website and its use of the internet generally involved it in using prohibited information beyond the date allowed for by the consent order.

15    Mr Pearce admitted that he made no enquiries about third party websites on which the respondent’s name and trading names appear. He claimed that this was because of his lack of knowledge about these sites. Those third party websites continued throughout October 2012 to refer to “Tasman Island Cruises” and “Tasman Island Adventure Cruises”. Mr Pearce claimed not to be aware that there was material prohibited by paragraph 1 of the consent order on the “TripAdvisor” website prior to reading the affidavit of Pennicott’s information technology expert, Mr Hennessy, sworn on 5 December 2012. He corrected these references on 26 December 2012 after earlier attempting to contact TripAdvisor. Mr Pearce said he attempted to remove material from other third party websites.

16    Mr Pearce said that he had no knowledge about names used on the respondent’s website which were discussed by Mr Hennessy. Mr Pearce said that a staff member put the name “Tasman Island Adventure Cruises” on the respondent’s website on 4 October 2012 without his knowledge and that it was removed as soon as he became aware of its presence in December 2012. As manager of the respondent’s business operation, Mr Pearce should have taken greater care to ensure its compliance with the order.

17    Mr Hennessy gave unchallenged evidence that he checked the respondent’s website on 5 October 2012 and found it unchanged from prior to the making of the consent order. On that day, the website referred to the respondent’s business as “Tasman Island Adventure Cruises”. On 15 October 2012, the website referred to “Tasman Island” at the top and “Adventure Cruises” further down on the page. It also referred to “YOUR 3 HOUR ADVENTURE CRUISE TO TASMAN ISLAND”. This appeared to be a crude attempt to avoid the effect of paragraph 1 of the consent order by separating two halves of one composite expression. However, the respondent referred to the prohibited “Tasman Island Cruise” on the same website. Such material was accessible by clicking on a drop down which took the reader to a new page. No explanation has been given for this behaviour which is in flagrant breach of paragraph 1 of the consent order.

18    Mr Dorney is the finance manager of Pennicott. He swore an affidavit in which he referred to visiting a number of tourist accommodation and car rental businesses to check whether the respondent’s brochures had been removed. He found the respondent’s original brochures on display on 8 October 2012 at the majority of the places he visited. He took photographs of the brochures. The brochures carried the name, “Tasman Island Adventure Cruises”.

19    Mr Pearce admitted that brochures using the name “Tasman Island Adventure Cruises” remained available to the public to refer to the respondent’s business after 4 October 2012. Mr Pearce admitted that he did not deliver replacement brochures for distribution until 15 October 2012. Mr Pearce said he gave specific instructions on 26 September 2012 to a Ms Nelsen to leave the current brochures on display until new brochures were ready. The new brochures did not arrive until 15 October 2012. This is conduct in defiance of the consent order at paragraph 1 and also at paragraph 3 which required the respondent to cease producing, distributing, maintaining on its website or otherwise, or using in any other way all brochures and any other promotional material whether in hard copy or in electronic form which does the things referred to at sub-paragraphs (a) to (j) of paragraph 3 of the order. Those matters are addressed later under the heading “Paragraph 3”.

20    Ms Nelsen is the manager of “Tourism Brochure Exchange”, a tourist brochure distribution business in Tasmania. She was advised by the parties to the substantive proceeding that she was required to remove the respondent’s existing brochures from places where they were then displayed, with such removal to occur no later than 4 October 2012. Ms Nelsen received that advice on 19 September 2012. However, on 26 September 2012, Mr Pearce emailed her requesting that the original brochures remain on display.

21    On 10 October 2012, the respondent’s solicitor, Mr Geason, contacted Ms Nelsen and asked her to arrange for the brochures to be removed as soon as possible. On 15 October 2012, the new brochures arrived at Ms Nelsen’s warehouse for distribution.

22    The email of 26 September 2012 revealed an intention on the part of Mr Pearce to ignore the 4 October 2012 deadline if the new brochures were not ready by that time. Compliance with the consent order was secondary to Mr Pearce’s convenience. Mr Pearce said that he was hopeful of getting an extension of time to comply with the Court’s orders and wrongly presumed that an extension would be granted as a matter of course. By 10 October 2012, the respondent was already in breach of the Court’s order, insofar as it concerned the use of a prohibited name, and had been in breach since 5 October 2012. Mr Pearce assumed that a new name for the respondent would be arrived at, without opposition by the applicant, by mid-September 2012, leaving him time to make all the necessary changes by 4 October 2012. Again, compliance with the Court order was secondary to whether the timing suited Mr Pearce. His priority should have been compliance with the order rather than settling on a new name for the respondent’s business.

Paragraph 3

23    Paragraph 3(b) required the respondent to cease using on its website or brochures an ochre and black banner in the same colour, style and type as Pennicott’s banner. Notwithstanding the order, the respondent continued to display such a banner throughout the first half of October 2012 on its brochures and website.

24    Paragraph 3(c) prohibited the use of the bright yellow colour of Pennicott in the respondent’s advertising. Notwithstanding that part of the order, the respondent continued to use a bright yellow colour which Mr Pearce asserted was actually “yellow-green”. I observed a so-called yellow-green sign as it was taken into Court. It was obviously yellow. The sign was displayed throughout the first half of October 2012.

25    Paragraph 3(d) prohibited the use of a golden black circle containing the words “Tasmania’s Best Value Tasman Island Cruise” in a similar fashion to the golden black circle used by Pennicott. Despite the terms of paragraph 3(d) of the consent order, the offending words and the circle remained in use by the respondent well into October 2012.

26    Paragraph 3(e) prohibited the use of logos of similar appearance to those used by Pennicott which asserted that the respondent was the “Peoples Choice Award WINNER” and had the “Tasman Island Blue Seal of Approval”. Those claims continued to be asserted on the respondent’s website through to mid-October 2012.

27    Paragraph 3(f) of the Order prohibited the respondent asserting that it “…uses the cruise route around the Tasman Island area which is that principally used by [Pennicott]”. The brochure used by the respondent after 4 October 2012 referred to the features of the three hour cruise and the cruise route which is identical to the cruise route used by Pennicott.

28    Paragraph 3(h) of the order prohibited the respondent from asserting that it is “the original Tasman Island cruise operator”. The brochures on display at accommodation and other places referred to in the evidence of Mr Dorney continued to use the words “Tasman Island’s original cruise operator”. Those brochures were available for public viewing after 4 October 2012 until mid-October 2012.

29    In its closing words, paragraph 3 required the respondent to take all reasonable steps to ensure that all hard copy material not in compliance with the various sub-paragraphs of paragraph 3 be destroyed by 4 October 2012. No steps were taken before that date. On the contrary, Mr Pearce instructed Ms Nelsen on 26 September 2012 not to remove the existing brochures on display until the new brochures were ready to replace them.

Paragraph 4

30    Paragraph 4 of the consent order obliged the respondent to cease, within the period 23 August 2012 to 4 October 2012, making any representation conveying or likely to convey the impression that the respondent is Pennicott or has or has had any association or connection with Pennicott.

31    In support of its allegation that this part of the consent order was breached, Pennicott relied on the evidence of Messrs Hennessy, Dorney and Nelsen contained in their affidavits and also on an affidavit of Mr Connor, a Tour Boat Skipper, employed by Pennicott. Mr Connor’s affidavit refers to a large yellow sign on the Arthur Highway which referred to Tasman Island Cruises. He also referred to similar signage at the respondent’s booking office. I am not satisfied that the displaying of these signs, without more, carries any implication that the two businesses were identical or associated with each other. Rather, the impression I have formed from the display of the signs is that they are competitors in the same market.

32    The Dorney affidavit refers to the brochures remaining on display in this period. Similarly, I do not consider that the brochures create an impression that the businesses are the same, associated or connected with one another. The Nelsen affidavit, by referring to the brochures, takes this matter no further. The Hennessy affidavit, in referring to the respondent’s website, other websites and brochures also does not provide a sufficient basis for establishing a breach of paragraph 4 beyond reasonable doubt. It should not be inferred that the respondent, by agreeing to paragraph 4 of the order, conceded that it had passed off its business as that of Pennicott.

Paragraph 6

33    Paragraph 6 required the publication of an advertisement by the respondent in an agreed form. Although, Mr Pearce and Ms Jeffrey concede that the order was not complied with, I am satisfied and Pennicott concedes that the respondent made efforts to comply with paragraph 6. The Court considers that no deliberate breach of this paragraph such as to amount to contempt has been established beyond reasonable doubt.

Paragraph 7

34    Paragraph 7 required the respondent to “immediately and permanently remove all yellow signs erected by it in or about the Arthur Highway in Tasmania and on or about its premises that display the words “Tasman Island Cruise”, “Tasman Island Adventure Cruise” or similar wording” [emphasis added].

35    Counsel for Mr Pearce and Ms Jeffrey concede that three such signs were permanently removed on 28 August 2012, rather than immediately on 23 August 2012. A fourth sign remained with the words altered to read “Tasman Adventure Cruises/Check in” on one side and “Tasman Adventure Cruises” on the other. Under cross-examination, Mr Pearce maintained that the sign was not yellow but yellow-green. He also claimed that the words “Tasman Adventure Cruise” were not similar to “Tasman Island Adventure Cruises”. The written submissions of his counsel concede his error in both respects. However, they emphasise that the sign was removed on 28 September 2012. Clearly, Mr Pearce did not act “immediately” to remove the signs. In respect of the fourth sign, he sought to excuse his delay on the basis of his own unjustified interpretation of the colour and content of that sign.

Conclusions on breaches of the consent order

36    Having regard to the foregoing, I am satisfied beyond reasonable doubt that Mr Pearce and Ms Jeffrey, as the human actors of the respondent, breached paragraphs 1, 3 and 7 of the consent order.

37    Mr Pearce displayed a cavalier attitude to compliance with the Court’s order. Ms Jeffrey’s role in the breaches of the consent order was less culpable. However, as the company’s sole director and shareholder, she must be held accountable, at least in part, for the transgressions of the respondent. It was her corporate alter ego. I accept the submission of counsel for Pennicott that both individuals prioritised business requirements over compliance with the Court’s orders.

Further conduct of the proceeding

38    The outline of written submissions filed on behalf of Mr Pearce and Ms Jeffrey seek an opportunity to address the Court on questions of penalty and costs in light of the findings contained in these reasons. It is appropriate to adjourn the matter to 2.15 pm on 23 September 2013 (by video link to Hobart) to hear submissions on penalties and costs.

39    On the other hand, if it is the intention of Mr Pearce and Ms Jeffrey to give further evidence in relation to penalties and costs, it is undesirable for that to proceed by video link. On that scenario, the hearing on 23 September 2013 may be converted to a directions hearing with a view to programming a later hearing on penalties and costs. Should either party desire that course, they should inform the docket judge’s staff as soon as is practicable.

Associate:

Dated:    16 September 2013

ANNEXURE A

    No: (P)TAD17/2012

Federal Court of Australia

District Registry: Tasmania

Division: General

PENNICOTT WILDERNESS JOURNEYS PTY LTD (ACN 114 449 348)

Applicant

BRUNY ISLAND ADVENTURE CRUISES PTY LTD (ACN 139 176 257)

Respondent

ORDER

THE COURT ORDERS THAT:

1.    An order that at the expiration of six weeks from the date hereof, the Respondent be permanently restrained from using the names “Tasman Island Adventure Cruises”, “Tasman Island Adventure Cruises Pty. Ltd.”, “Tasman Island Cruise”, “Tasman Island Cruises”, “Bruny Island Adventure Cruises” and “Bruny Island Adventure Cruises Pty Ltd” ;

2.    An order that the Respondent be permanently restrained from today from using the name “tasmanislandcruisesonline” and using the domain name “tasmanislandcruisesonline.com.au”.

3.    An order that the Respondent within six weeks from the date hereof cease producing, distributing, maintaining on its website or otherwise, or using in any other way all brochures and any other promotional material whether in hard copy or in electronic form which:

(a)    Represents that the Respondent conducts cruises to Bruny Island;

(b)    Uses an ochre and black banner in the same colour, style, and type style as the Applicant;

(c)    Uses predominantly the bright yellow colour of the Applicant’s advertising;

(d)    Uses a gold and black circle containing the words :Tasmania’s Best Value Tasman Island Cruise” in a similar fashion to the gold and black circle used by the Applicant;

(e)    Uses logos of a similar appearance to those used by the Applicant asserting “Peoples Choice Award WINNER” and “Tasman Island Blue Seal Of Approval”; or similar words implying official recognition to that effect;

(f)    Suggests that the Respondent uses the cruise route around the Tasman Island area which is that principally used by the Applicant;

(g)    Asserts that the Respondent operates an “Award Winning 3 Hour Tasman Island Cruise”;

(h)    Asserts that the Respondent is the original Tasman Island cruise operator;

(i)    Implies that Craig Parsey is the owner and operator of the Respondent’s business and that the Respondent’s business is Mr Parsey’s family-run business;

(j)    Uses the assertion that “Our Tasman Island Cruises are rapidly becoming the most talked about Cruise Adventure of a lifetime. Just ask Oprah!’;

and take all reasonable steps to ensure that all hard copy of such material is destroyed within the same period.

4.    An order that the Respondent cease within six weeks from the date hereof making any representation whatsoever whether verbally or by way of brochure, electronically or otherwise which conveys or is likely to convey the false impression that the Respondent is the Applicant, or has or has had at any time any association or connection with the Applicant.

5.    An order that the Respondent and the Applicant within three weeks from the date hereof notify by way of a joint letter all travel agents, travel wholesalers, visitor information centres, accommodation providers, tourism brochure distribution agents, Tourism Tasmania and any other persons commissioned by the Respondent to sell or promote its Tasmanian cruise business, of the terms of the resolution of these proceedings. The joint letter is to be expressed in terms agreed by the parties or in default of agreement determined by the District Registrar of the Court in Tasmania and is to be informative, not derogatory, and to emphasise the terms of the settlement and the separate individual identity of each of the Applicant and the Respondent.

6.    An order that the Respondent cause to be published at its own expense within three weeks from the date hereof an advertisement in the same terms as the joint letter referred to in Order 5 hereof in the following newspapers: the Mercury, The Examiner and The Advocate in Tasmania, The Age and the Herald Sun in Victoria, The Sydney Morning Herald and The Daily Telegraph in New South Wales, The Courier Mail in Queensland, The West Australian in Western Australia, The Advertiser in South Australia and the Northern Territory News in the Northern Territory.

7.    An order that the Respondent immediately and permanently remove all yellow signs erected by it in or about the Arthur Highway in Tasmania and on or about its premises that display the words “Tasman Island Cruise”, “Tasman Island Adventure Cruise” or similar wording.

8.    An order that the Respondent pay the Applicant’s costs of these proceedings to be taxed.

Date that entry is stamped: 23 August 2012.

(for) Deputy District Registrar