FEDERAL COURT OF AUSTRALIA

Australian Competition & Consumer Commission v Chaste Corporation Pty Ltd (No 6) [2013] FCA 1112

THE COURT DECLARES THAT:

1.    The Fourth Respondent is guilty of contempt of court in that:

Charge 1

In the period from December 2009 to 2 September 2010 he was directly or indirectly knowingly concerned in the promotion or conduct of the business of SensaSlim Australia Pty Limited (SensaSlim) which was a business relating to weight loss and thereby breached order 27 of the orders made by the Honourable Justice Lander of the Federal Court of Australia, dated 2 September 2005 in proceeding number QUD 252 of 2001.

Particulars:

1.1    On 2 September 2005, Justice Lander made an order in the following terms:

    “The fourth respondent be restrained, for five years from the date of this order, from being directly or indirectly knowingly concerned in the promotion or conduct by a corporation of any business relating to weight loss, cosmetic or health industry products or services of any kind.” (Order 27)

1.2    SensaSlim conducted a business which involved, amongst other things:

a)    manufacturing and supplying an intra-oral solution administered as a spray marketed and distributed by it as a weight loss aide (SensaSlim Solution);

b)    entering into franchise agreements with distributors (Area Managers) for the supply of the SensaSlim Solution to Area Managers, for resale by them to retailers;

c)    supplying services to Area Managers, including training, marketing and sales support;

d)    the licensing and the promotion of the SensaSlim Solution.

1.3    In the period from at least sometime in December 2009 until 2 September 2010, the Fourth Respondent:

a)    prepared some or all, or caused to be prepared, a promotional DVD about SensaSlim and the SensaSlim Solution which was shown to prospective Area Managers;

b)    prepared some or all, or caused to be prepared and approved, and caused to be published newspaper advertisements advertising the opportunity to become an Area Manager for the distribution of the SensaSlim Solution;

c)    prepared some or all, or caused to be prepared and approved, a document entitled “Area Manager Proposal” (Area Manager Proposal) and disclosure documents for provision to prospective Area Managers;

d)    engaged in conversations with prospective Area Managers to encourage entry by them into franchise agreements with SensaSlim for the distribution of the SensaSlim Solution;

e)    engaged in email correspondence with prospective Area Managers regarding the business of SensaSlim, to encourage entry by them into franchise agreements with SensaSlim and sale of the SensaSlim Solution;

f)    prepared some or all, or caused to be prepared and approved, newsletters circulated by email by SensaSlim to potential Area Managers and Area Managers;

g)    controlled and directed the process for engagement by SensaSlim with potential Area Managers, and entry by SensaSlim into franchise agreements with Area Managers.

Charge 2

In the period from December 2009 to 2 September 2010 he was knowingly concerned in SensaSlim in trade or commerce, making, or permitting to be made, representations as to the particular standard or quality of the SensaSlim Solution, without, prior to making the representation, SensaSlim providing the representee with a copy of the orders made by the Honourable Justice Lander of the Federal Court of Australia dated 2 September 2005 in proceeding number QUD 252 of 2001, or informing the representee of the existence of the orders and giving the representee the address of the Federal Court website, and thereby breached order 29 of those orders.

Particulars:

1.1    On 2 September 2005, Justice Lander made an order in the following terms:

    “The fourth respondent be restrained for a period of five years from the date of this order from in any manner being knowingly concerned in any corporation in trade or commerce, making, or permitting to be made, any representation as to the nature, quality, fitness for any purpose, testing, history, composition, standard, approval by any person, performance characteristics, uses or benefits of any good or service unless, prior to making the representation:

29.1    he believes the representation to be true and accurate;

29.2    the corporation informs the representee in writing of all information of which he is aware that refutes, qualifies or contradicts any part of the representation; and

29.3    the corporation provides the representee with a copy of these orders or informs the representee of the existence of these orders and gives the representee the address of the Federal Court website, namely www.fedcourt.gov.au, from which a copy of these orders can be obtained.” (Order 29)

1.2    The particulars in set out in paragraphs 1.2 of Charge 1 are repeated.

1.3    From about mid March 2010, SensaSlim provided potential Area Managers with the Area Manager Proposal and showed a promotional DVD to those potential Area Managers.

1.4    In the Area Manager Proposal (at p 20), the promotional DVD (at 28:03 to 30:54) SensaSlim represented that the SensaSlim Solution was the subject of a large world wide clinical trial and that the trial established the efficacy of the SensaSlim Solution, being a representation that the SensaSlim Solution was of a particular standard or quality, namely that its efficacy had been established by a large world wide clinical trial.

1.5    Area Managers who were provided with the Area Manager Proposal, or were shown the promotional DVD were not provided with a copy of the Orders or made aware of the Orders by SensaSlim.

THE COURT ORDERS THAT:

1)    The Fourth Respondent be imprisoned for a period of three years with the first 18 months to be served in any event. As to that 18 months, the 27 days served between 18 November and 15 December 2011 is to count as imprisonment already served. The balance of the sentence is suspended for a period of three years commencing on his release on conditions that, during that three year period, the Fourth Respondent:

a)    not directly or indirectly engage in or be knowingly concerned in the promotion or conduct by a corporation of any business relating to weight loss, cosmetic or health industry products or services of any kind;

b)    does not commit any criminal offence, other than an offence against the Traffic Act 1949 (Qld) or the Transport Operations (Road Use Management) Act 1995 (Qld) or other state or territory equivalent, punishable by imprisonment.

2)    If the conditions are not met, the suspension shall cease and the Fourth Respondent will, if a judge so directs, serve all or such part of the remainder of the 18 month period not served as the judge may direct.

3)    In the event that, after release upon serving 18 months imprisonment, the Fourth Respondent complies with the conditions for that period of three years, any requirement to serve the balance of the sentence be extinguished.

4)    The existing imprisonment and arrest warrants be discharged and, in lieu thereof, further warrants issue for the arrest and committal of the Fourth Respondent to prison for a period of 18 months.

5)    The Fourth Respondent pay the Applicant’s costs of and incidental to the application for contempt to be taxed if not agreed.

6)    The Applicant and Fourth Respondent be granted liberty to apply.

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

REASONS FOR JUDGMENT

1        On 27 September 2013, for reasons which I then published, I reached particular conclusions in respect of two charges of contempt contained in the statement of charge made by the applicant, the Australian Competition and Consumer Commission (the Commission), against the fourth respondent, Mr Peter Clarence Foster: see Australian Competition and Consumer Commission v Chaste Corporations Proprietary Limited (No 3) [2013] FCA 984 (the principal judgment). These reasons for judgment must be read in conjunction with the principal judgment.

2        It is instructive to commence by repeating from the principal judgment at paragraphs [246] and following the particular conclusions which I reached in respect of the charges made:

…I conclude that the Commission has proved, beyond reasonable doubt the following in respect of charge 1:

(a)    The Court (Lander J) did make an order in these proceedings on 2 September 2005 as alleged.

(b)    Mr Foster was aware of the terms of that order in the period from December 2009 to 2 September 2010 (“the material period”).

(c)    During the material period, SensaSlim conducted a business relating to weight loss.

(d)    During the material period, that business involved, amongst other things:

(i)    The manufacture and supply to franchisees for placement in retail outlets in an allotted franchise area of an orally administered spray promoted as a weight loss aide.

(ii)    The entering into franchise agreements with franchisees for the distribution for reward by them to retailers in their allotted franchise area of that product - the SensaSlim product.

(iii)    The SensaSlim business also involved, in terms of the agreements made with Area Managers, the supply of services to those managers such as training, marketing and sales support.

(iv)    Again in terms of such agreements, that business also entailed the granting of a licence to the Area Manager, within an allotted franchise area, of the right to distribute the SensaSlim product and use its logo and its trade mark, “Nothing tastes as good as slim feels”.

(e)    During the material period, Mr Foster, by the editing and supply of a script and some raw footage, prepared some of, and by the commissioning of Messrs Frare and Woolley on behalf of SensaSlim, caused to be prepared, the SensaSlim promotional DVD.

(f)    During the material period, Mr Foster prepared some at least and approved some at least and by necessary inference flowing from the evidence of Dr Waters and Mr Emerton caused to be published newspaper advertisements which, though they did not state the same in terms, advertised what was in fact an opportunity to become a franchised Area Manager for the distribution of the SensaSlim product.

(g)    During the material period, Mr Foster prepared some at least of the Area Manager Proposal and, inferentially, also prepared or caused to be prepared the related documents for disclosure to prospective franchisees. He did this in consultation with Mr Emerton.

(h)    During the material period and under the alias “Peter O’Brien”, Mr Foster engaged in conversations by telephone with prospective area managers so as to encourage them to enter into franchise agreements with SensaSlim for the distribution of its product.

(i)    During the material period, Mr Foster, using the alias email addresses mentioned above, engaged in email correspondence with prospective franchisees regrading SensaSlim’s business to encourage them to enter into franchise agreements.

(j)    During the material period, Mr Foster prepared, in consultation with Mr Emerton, some at least of the newsletters distributed to Area Managers. He was undoubtedly involved in the preparation of other newsletters than the first but it is not possible on the evidence to conclude with the preparation of which particular later newsletters he was involved.

(k)    During the material period, Mr Foster controlled and directed the process for engagement by SensaSlim with potential Area Managers and the entry by SensaSlim of franchise arrangements with Area Managers. This control and direction is directly proved via the evidence of Mr Emerton and Ms Stainstreet.

3        On that basis I found that charge 1 was proved and that Mr Foster was directly knowingly concerned in the conduct of the business of SensaSlim.

4        As to charge 2, I reached the following conclusions in the principal judgment (at [248] and following):

… the Commission has proved, beyond reasonable doubt, that, in the material period, Mr Foster was knowingly concerned in SensaSlim, in trade or commerce, making representations as to a particular standard or quality of the SensaSlim product without, prior to the making of that representation, SensaSlim providing the representee with a copy of the order made by the Court on 2 September 2005, or informing the representee of the existence of those orders and giving the representee the address of the court’s website.

5        I found that the Commission had, on the evidence, established to the requisite standard that the Court on 2 September 2005 made the order alleged in charge 2, and that Mr Foster was aware of the terms of that order during the material period: paragraph [249] of the principal judgment.

6        I further found, at paragraph 250, as follows:

As to other particulars given in respect of charge 2, the evidence establishes, beyond reasonable doubt, that, during the material period:

(a)    SensaSlim conducted the business as alleged and found proved in respect of charge 1.

(b)    From about mid-March 2010, SensaSlim provided prospective Area Managers with the Area Manager Proposal and showed those prospective managers the SensaSlim promotional DVD.

(c)    In that promotional DVD there is a representation that the SensaSlim product was the subject of a large world-wide clinical trial and that the trial established the efficacy of the SensaSlim product for weight loss purposes. That representation was a representation that the SensaSlim product was of a particular standard or quality namely, that its efficacy had been established by a world-wide clinical trial.

(d)    Those prospective Area Managers who were provided with the Area Manager Proposal and who were shown the promotional DVD were not provided with a copy of the Court’s orders of 2 September 2005 or made aware of those orders.

7        I then added, at paragraph 251:

It follows that my further conclusion is that those particulars given in paragraphs 2.4, 2.5, 2.6 and, to the extent that they refer to Newsletters 5, 7 and 8, those given in paragraphs 2.7 and 2.8, are not proved to the requisite standard. This does not mean that Mr Foster must be found not guilty in respect of charge 2. Rather, it means that the charge is proved only to the extent otherwise particularised in that charge.

8        As to the orders made by the Court (Lander J) on 2 September 2005 it should be recalled that those orders contained a restraint in paragraph 28 in respect of Mr Foster, that he not, for five years from the date of the order, be directly or indirectly knowingly concerned in, or party to, or aiding and abetting counselling or procuring a corporation which supplies to another person products said to have health, weight loss or cosmetic benefits:

28.1    inducing or attempting to induce that other person not to sell those products at a price less than the price specified by that corporation; or

28.2    using in relation to those products a statement of price likely to be understood by that other person as a price below which the products are not to be sold.

9        Paragraph 27 and paragraph 29 of the order also contained restraints. These, not the restraints in paragraph 28 of the order, are of present relevance, as is alleged in the charges. The restraints in paragraphs 27 and 29 of the order are:

27.    The fourth respondent [Mr Foster] be restrained, for five years from the date of this order, from being directly or indirectly knowingly concerned in the promotion or conduct by a corporation of any business relating to weight loss, cosmetic or health industry products or services of any kind.

29.    The fourth respondent be restrained for a period of five years from the date of this order from in any manner being knowingly concerned in any corporation in trade or commerce, making, or permitting to be made, any representation as to the nature, quality, fitness for any purpose, testing, history, composition, standard, approval by any person, performance characteristics, uses or benefits of any good or service unless, prior to making the representation:

29.1    he believes the representation to be true and accurate;

29.2    the corporation informs the representee in writing of all information of which he is aware that refutes, qualifies or contradicts any part of the representation; and

29.3    the corporation provides the representee with a copy of these orders or informs the representee of the existence of these orders and gives the representee the address of the Federal Court website, namely www.fedcourt.gov.au, from which a copy of these orders can be obtained.

10        Mr Foster was, by court order, required to attend and surrender himself into the custody of the Court on the occasion when the reasons for judgment for the findings to which I have referred were handed down. He failed to attend as required. There was though an appearance on his behalf by counsel and his solicitors. At that time, I fixed today, 24 October 2013, as the date upon which submissions would be heard in respect of the orders to be made, including orders as to penalty and costs consequential upon the findings made in the principal judgment. The date, 24 October 2013, was fixed after hearing submissions from both the Commission and on behalf of Mr Foster as to a date which would be convenient in terms of representation which Mr Foster hoped to secure namely, that his junior counsel, Mr Burrow, be led by Mr Bennett QC.

11        When the case was called on this morning and Mr Foster failed to appear, Mr Burrow sought and obtained leave from the Court for his instructing solicitors, Fisher Dore, who had hitherto acted on behalf of Mr Foster, to withdraw.

12        At the same time, and prior to departing from the court, Mr Burrow sought, upon a request apparently made of his solicitors by Mr Foster, to tender to the Court a letter, together with an accompanying submission and related cases, authored by Mr Foster. I decided to receive that letter, albeit not to accept assertions of fact in that letter which were not the subject of express concession by the Commission. In that letter, Mr Foster makes a request for an adjournment of the hearing until 28 October. He also advances a detailed, indeed sophisticated, submission in respect of penalty in the event that the adjournment request is not granted.

13        The occasion for the adjournment put forward in Mr Foster’s letter of 24 October 2013 is an asserted misconception on his part as to the date upon which submissions would be heard in respect of penalty. That, in turn, is said to have infected his ability to secure representation by Mr Bennett QC.

14        A question which necessarily arises is whether or not the hearing of submissions in respect of penalty should be adjourned either as requested or to some other date?

15        I have described Mr Foster’s submission as sophisticated because inter alios, it contains a compendium of supporting authorities, including an authority which is relevant, at least by analogy, to the question of whether the hearing should be adjourned. That authority is R v Gee (2012) 113 SASR 372 (Gee’s Case), a decision of the Full Court of the Supreme Court of South Australia. That case concerned not a contempt charge but rather a trial in respect of an offence against the general criminal law. Nonetheless, it is relevant by analogy for the examination of the question of whether under our system of justice, a trial can occur at all in the absence of a defendant. That was a question upon which differing views were expressed in the South Australian Full Court. The majority, Gray and Sulan JJ, concluded that it was permissible for criminal proceedings to be conducted and continued in the absence of an accused, the question of whether or not so to proceed being one requiring the exercise of a judicial discretion, a discretion which ought to be exercised in favour of proceeding in the absence of an accused with caution. The dissenting judge, Peek J, concluded that there was a clear rule under the common law of Australia that a trial must be conducted in the presence of an accused.

16        As it happens, the position reached in respect of the general criminal law in Gee’s Case by majority coincides with the conclusion as to the position in respect of the practice and procedure in respect of the law of contempt by Pembroke J in Ronowska v Kus (No. 2) (2012) 221 A Crim R 261. In that case, after a lengthy consideration of pertinent authority, commencing at paragraph 51 under the heading, “Absence of Contemnor”, Pembroke J concluded that it was possible to proceed with a hearing in respect of a charge of contempt and to sentence the person concerned, even to a period of imprisonment, in the absence of that person, the question as to whether or not so to do being one for the exercise of discretion. That discretion was one which his Honour stated, at paragraph 51, “should be exercised sparingly”. His Honour further observed at paragraph 53:

The most common jurisprudential basis for an exception to the rule [the rule about the presence of an accused] has its foundation in the accused’s own conduct. In certain circumstances, the conduct of an accused will be treated as amounting to a voluntary waiver of his right to be present at trial and sentence. In such circumstances, the accused forfeits the right to be present. Examples of conduct that might in a particular case justify the exercise of discretion to proceed in his absence include where an accused absconds on bail or is so disruptive that he is removed from court.

Reference might usefully be made in support of that proposition, as indeed Pembroke J so considered at paragraph 54, to R v Jones (1998) 72 SASR 281 where, at page 295, Lander J, then a member of that Court with whom Prior and Wicks JJ agreed, stated that:

... if the court is satisfied that the accused has waived his or her right to be present during the trial, and that the trial may proceed without any injustice to that person except the injustice caused by the person’s own waiver, then the court may proceed with the accused’s trial.

17        That, in my opinion, is this case. It is quite apparent from Mr Foster’s letter of 24 October 2013 that he has been in communication with those who, until today, were his legal representatives. Indeed, Mr Foster’s submission includes a draft, apparently prepared by Mr Burrow of counsel, of a submission on sentence. That draft could only have come into Mr Foster’s possession by virtue of communication between him and his then legal representatives.

18        It was plain on the face of the order of adjournment made on 27 September that the proceedings were adjourned until today. That was an order made in open court and in the presence of Mr Foster’s legal representatives; that apart, the order was one readily available to the world at large by an inquiry of the Court. It is also one readily available to the world at large via the mechanism of a Commonwealth Courts Portal search in respect of this particular matter.

19        Mr Foster apparently wished to have a submission in a particular form made, which was not one which his legal representatives were disposed to make. In any event, they were left without instructions. It was perfectly possible for Mr Foster to have appeared today to have sought an adjournment. In my view, this is a case where Mr Foster has laboured under a misapprehension that was of his own making. He has had the means, either himself or via his then legal representatives, to be appraised of the correct date. The draft written submission seems to have been prepared to the end of being put forward today. Mr Foster’s legal representatives confirmed that he was aware of the listing today.

20        There is no separate note from Mr Bennett QC attesting to his being also under a misapprehension as to the date. I accept that Mr Foster stated publicly to journalists that the 28th was the date. Even so, he has still chosen not to attend today to chance his hand as to whether an adjournment would be granted.

21        In my view, Mr Foster has by his own conduct waived the right to be present. For that reason, I decided to hear submissions in respect of penalty from the Commission and to proceed to judgment in respect of penalty and related issues.

22        Anticipating that such a decision might be made, Mr Foster’s submission is also directed to the question of penalty. I take into account that the submission that he makes in his letter is so directed in deciding that, in the particular circumstances, there is no injustice, other than that necessarily occasioned by an absence, which is voluntary, in proceeding today.

23        Before turning further to the question of penalty and related orders, something further needs to be said in relation to the listing of the matter for delivery of the principal judgment. That is because, having regard to statements made to the press, I understand that Mr Foster may be under the apprehension – and I do not doubt that it is an honest apprehension – that the listing was in some way particularly contrived. Those acting for him were notified on 26 September that judgment would be handed down on 27 September. As it happened, 26 September 2013 was Mr Foster’s 51st birthday. That was not a matter known to me at the time. The listing was nothing more than the coincidence of an assurance on my part of an ability to give judgment prior to proceeding on a period of leave and the need forthwith to notify the parties of the handing down of a judgment on the last day prior to that period of leave namely, 27 September.

24        In cases such as these, a number of considerations have been identified as pertinent to the determination of the penalty, if any, which a court should impose in respect of a proved contempt. The authority which draws those principles together and which is frequently cited is Louis Vuitton Malletier SA v Design Elegance Proprietary Limited (2006) 149 FCR 494, where, at pages 501-502, Merkel J, in what I apprehend to be a non-exhaustive way, identified the following as relevant considerations:

(a)    the contemnor’s personal circumstances;

(b)    the nature and circumstances of the contempt;

(c)    the effect of the contempt on the administration of justice;

(d)    the contemnor’s culpability;

(e)    the need to deter the contemnor and others from repeating contempt;

(f)    the absence or presence of a prior conviction for contempt;

(g)    the contemnor’s financial means;

(h)    whether the contemnor has exhibited genuine contrition and made a full and ample apology;

(i)    whether the conduct falls within the most serious category of criminal contempt cases, such as warrant the imposition of a term of imprisonment;

and

(j)    whether or not imprisonment is a “last resort” penalty in the circumstances of the case.

25        I shall deal with such of these considerations as seem to me to be relevant later in these reasons for judgment.

26        First, it is necessary to give context by referring to the rationale for the power conferred on the Court by the Federal Court of Australia Act 1976 (Cth) to deal with cases of contempt. That was put succinctly by Gibbs CJ and Mason, Wilson and Deane JJ in Australasian Meat Industry Employee’s Union v Mudginberri Station Proprietary Limited (1986) 161 CLR 98 at 107 in this way:

The underlying rationale of every exercise of the contempt power [is] that it is necessary to uphold and protect the effective administration of justice.

27        The very content of the word “contempt” gives an understanding as to the rationale for the existence of a power on the part of courts to deal with cases of contempt of court. The Oxford Dictionary defines “contempt” in this way:

The action of contemning or despising, the holding or treating as of little account or as vile and worthless, the mental attitude in which a thing is so considered.

28        Under the Australian Constitution, Chapter III vests the judicial power of the Commonwealth in the High Court, in other courts such as this established by the Commonwealth Parliament and, if the Commonwealth Parliament so chooses, in State courts invested with federal judicial power. There is nothing personal to a judge in exercising a power to punish in respect of contempt. The judge is merely constituting the Court for the exercise, pursuant to a constitution approved to govern the Australian people, of a judicial power of the Australian people.

29        The exercise of that judicial power, in other words, the administration of justice, forms part of the compact between all of us by which transactions are conducted, both personally and in business, and disputes are adjudicated independently, according to the rule of law. When one recalls the meaning of the word contempt, the power to punish in respect of contempt is a power exercised on behalf of all of the Australian people, by whoever happens to constitute the Court, in respect of one who has been proved to have treated the judicial power, which the Australian people have chosen to govern them in matters of disputation, as of little account. To tolerate proved contempts is to tolerate a situation where the rule of individual whim is substituted for the rule of law.

30        When one looks to Mr Foster’s personal circumstances, which necessarily include his antecedents, one sees over time, in my view, a lengthy and concerted preference for individual whim over the rule of law. I make that observation for reasons which emerge from consideration of Mr Foster’s background encounters with criminal justice systems, and with other justice systems beyond the criminal, both here and in other countries.

31        The following summary is offered by McMurdo P with whom Mackenzie and Chesterman JJ agreed in R v Foster [2009] 1 Qd R 53 at paragraphs 2 and following, under the heading, “Antecedents’:

The prosecutor at sentence provided the following information about Mr Foster. He was aged 44 and 45 during the period of the offending. He had a relevant criminal history in Australia, UK and the USA.

In 1987 in the Southport Magistrates Court he was fined A$1,000 for an offence concerning the management of Slimway Tea Company Pty Ltd whilst an undischarged bankrupt. In 1989 in the Municipal Court of Los Angeles, California he was dealt with for two counts of false advertising and one count of violating the Californian Health and Safety Code. The penalty was four months suspended imprisonment and three years probation. He was also ordered to pay restitution of US$228,000 and investigation costs of US$10,000 and prohibited from selling in California any tea or other products which purported to have health benefits. In 1994 in the Crown Court, Warwick, England, he was fined a total of £21,000 and ordered to pay £8,000 costs for five counts of offering to supply, and one count of supplying, goods to which a false trade description applied. In 1995 in the Crown Court, Liverpool, England, he was sentenced for conspiracy to supply goods to which a false trade description applied. On appeal, his sentence was reduced to 18 months imprisonment and the original recommendation for deportation was set aside.

In 1996 in the Southport Magistrates Court he was convicted and fined A$4,000 for again managing a corporation whilst insolvent. He was also sentenced to 18 months imprisonment to be released after five months for three offences of inducing a witness to give false testimony and to lesser concurrent terms of imprisonment for two counts of imposition and one count of possessing a falsified foreign passport. In 1998 in the Melbourne Magistrates Court he was sentenced to six months imprisonment to be released after serving 10 days for two counts of imposition, damaging Commonwealth property, escaping from lawful custody, two counts of assaulting police and one count of resisting arrest. In 2000 in the Crown Court, St Albans, England, he was sentenced to 33 months imprisonment and disqualified from being a company director in the UK for five years for three counts of using a false instrument.

On 2 February 2007 in Vanuatu he was sentenced for being a prohibited immigrant to six weeks imprisonment, fined A$15,180 and ordered to pay prosecution costs of A$632.50 or, in default, be imprisoned for an additional two months.

(Footnotes omitted)

32        The Queensland Court of Appeal was in that case dealing with a charge contrary to section 400.4(1) of the Criminal Code Act 1995 (Cth) (money laundering where the value of the money concerned was greater than $100,000). That offence was committed between 2 August and 14 October 2006. In respect of that offence, Mr Foster was sentenced to four and a half years imprisonment to commence from his detention in custody on 5 February 2007, with a non-parole period of two years and three months. He was also ordered to pay restitution in the sum of $214,138.47. His application for leave to appeal against that sentence on the basis that it was manifestly excessive was refused.

33        There are necessary reminders to record explicitly as to bases upon which Mr Foster is not being sentenced when one considers the nature and circumstances of the contempt. Mr Foster is to be dealt with for the charges found proved on the basis set out in the principal judgment. It is no part of my task today to impose any penalty on him at all in respect of his failure to attend on 27 September 2013. Nor is it any part of the charges made by the Commission, which to the extent indicated in the principal judgment I have found proved, that the conduct concerned was misleading or deceptive in relation to the qualities of the SensaSlim product. It needs firmly to be borne in mind that the task today is to deal with Mr Foster in respect of the contempts alleged and found proved; nothing more and nothing less.

34        The orders made on 2 September 2005, having regard to the reasons for judgment delivered by Lander J (Australian Competition and Consumer Commission v Chaste Corporation Pty Ltd (in liquidation) [2005] FCA 1212), had a very particular protective element to them, so far as the public at large was concerned. The restraints were deliberately and necessarily tailored to the conduct which his Honour had found proven in those proceedings. They were designed to bring home to Mr Foster a need to observe particular behaviours and, for that matter, to refrain from engaging in particular conduct.

35        It is quite obvious to me that Mr Foster treated those orders as of little moment. The only recognition he gave to them was in his recognition of the need by subterfuge to conceal his involvement in conduct which would amount to a breach of those orders. The conduct concerned was deliberate, cynical and flagrant, directed wholly to mercenary ends. It was not victimless conduct. I have read closely and carefully the contents of Mr Foster’s letter of 24 October in which he makes particular assertions as to the worth or otherwise of investment decisions made in respect of SensaSlim franchises. What needs to be recognised and what Mr Foster utterly fails to recognise is that those investment decisions were made without the benefit of the investors concerned having, as the orders in 2005 required, the attention of investors being drawn to those orders. Further, the very involvement of Mr Foster in the making of representations concerning the SensaSlim product to prospective investors was in the manner in which I have found in the principal judgment, also a breach of orders made in 2005.

36        What Mr Foster’s subterfuge and deliberate breach of the orders did was to deny potential investors the very real benefit of making an informed decision as to whether or not to invest in SensaSlim franchises. That informed decision would necessarily have involved the exposure of potential investors to Mr Foster’s past conduct in relation to Chaste Corporation. Insofar as Mr Foster’s written submissions are predicated on the philosophy “Let the buyer beware”, the answer to that is let the buyer make an informed decision. Only then does the adage, “Let the buyer beware” have a neutral resonance.

37        Mr Foster observes that the statements of particular investors, which form part of the material tendered on behalf of the Commission, are untested by cross-examination. That is true. He has though, by his own conduct, denied himself the possibility of either directly himself or via legal representation making a submission that the statements concerned should not be treated at face value. What they disclose is not just the loss of tens of thousands of dollars by particular individuals, but the related emotional distress and relationship breakdown which can occur in circumstances of financial loss. In some cases, it appears to me that the loss concerned has had catastrophic consequences for the individuals whose statements are exhibited to the Commission’s material.

38        In deciding the appropriate penalty to impose, I expressly take into account that the conduct concerned is not victimless. Further, on the evidence to which I refer in the principal judgment, whilst individual investments are to be measured in the tens of thousands of dollars, collectively, the investments concerned must necessarily be measured in the millions. It is not possible to find the extent to which, had there been compliance with court orders, that the investments concerned would or would not have been made, only that Mr Foster’s conduct denied investors an informed choice and did so by conduct which was, itself, a breach of court orders.

39        Mr Foster was involved in a way which amounted to being the directing mind and the will of SensaSlim Australia. He was, undoubtedly involved in the management of that company and involved, in a practical sense at least, at the highest level.

40        It is difficult to envisage a more flagrant and deliberate breach of injunctive orders than that revealed by the conduct disclosed in the principal judgment. This sort of conduct, if accepted or tolerated, is ultimately destructive of the very society in which Mr Foster chooses, preferentially, to live. All of us enjoy the benefits in Australia of the rule of law. Part of the rule of law is obedience to injunctive orders made by this Court unless there is a reasonable excuse for the lack of compliance. I regard this particular case as an extremely serious contempt.

41        As to Mr Foster’s culpability, it will be apparent from what I have said that he is directly culpable and, further, utterly without remorse or contrition.

42        The material before me does not give great detail as to Mr Foster’s personal circumstances beyond that he lives in rented accommodation with his mother and, it seems, also his sister, Jill. I am well prepared to accept, as indeed I have from the outset of these proceedings, that Mrs Foster, his mother, is in indifferent health. I further accept that Mr Foster is a dutiful son in the sense that he is devoted to caring for his mother in her sunset years.

43        The Commission submitted that there was no obvious history of lawful employment by Mr Foster. As to that, it is not possible with any precision to delve into matters of history prior to his release from prison in 2009. In his letter to the Court, Mr Foster makes reference to an endeavour on his part in the preceding decade to start a new life in Fiji. Since his release from prison in Australia in 2009, there is no evidence of his following lawful employment. What there is evidence of is of his following unlawful employment, unlawful in the sense that his involvement with SensaSlim amounted to a contempt for the reasons given in the principal judgment. He is, therefore, not someone who demonstrably has had any lawful means of support since 2009.

44        Mr Foster also attributed to Mr Bennett QC in his letter of 24 October, this:

Mr Bennett QC is now prepared to represent me because it is my understanding that he believes that the persecution and relentless pursuit of Peter Foster by regulators has gone on for too long and that someone needs to put everything into perspective. He has that unique perspective he can share.

Mr Bennett QC is a sometime Commonwealth Solicitor General. As Mr Foster refers to in his letter, it fell to Mr Bennett in that capacity to lead me when I was in practice in proceedings in which we appeared on behalf of the then Minister for Customs and Justice relating to his extradition to the United Kingdom: Foster v Minister for Customs and Justice (2000) 200 CLR 442. As I record in the principal judgment, Mr Foster chose, notwithstanding that prior involvement, not to make any objection to my hearing the proceeding, nor for that matter did I separately form the view that it was necessary for me to disqualify myself.

45        I accept for the purposes of these proceedings that Mr Bennett QC did accept a retainer to appear. I read nothing more into that, particularly given the undoubted eminence of Mr Bennett QC, than the considered and commendable exemplification of what is known as “the cab-rank rule” in relation to those practising at the Bar: in other words, a disposition, if requested, and either on a payment of an appropriate fee or, in some circumstances, without fee, to appear for any person and to do so without fear, favour or affection. It would be a very grim day indeed in Australia if members of the Bar were not to take that view in relation to the representation of persons before our courts.

46        The assertions which Mr Foster makes in relation to his sentencing history and to the motivations of others should be treated as nothing more than that, in other words, mere assertions. There is no element of persecution in the bringing of this proceeding by the Commission. Had I considered that the proceeding may have been an abuse of process then, after giving the Commission an opportunity to be heard in that regard, I should, if I considered it an abuse, have dismissed the proceeding. To the contrary, the proceeding is one brought in the public interest by a regulator which is given by our Parliament the day to day general administration of our competition and consumer laws. The proceeding is brought for the vindication of the administration of justice, not private vengeance. Mr Foster’s submission that there is an element of vengeance is to be rejected. Instead, that submission is to be regarded as a paradigm example of a lack of insight on his part into the need to abide by the rule of law.

47        There are features of Mr Foster’s character, in my view, disclosed by the evidence led in the proceeding, which are narcissistic, grandiose and self-important. There is a tendency on his part, manifested over decades by the history to which I have referred, to chose to live according to his particular moral compass or lack thereof, as opposed to that of the society in which he lives. This also I take into account in relation to sentencing.

48        There is, in my view, a singular need for deterrence both in the particular sense and the general in relation to the contempts found. The penalty in this case must be such as to bring home to Mr Foster, in a way which one might have thought ought to have been assimilated already, having regard to the history mentioned, of the need to comply with the rule of law in the society in which he chooses to live. There is also a more general need to make that apparent to all of those who would be tempted not to accept the judgment of courts in this country.

49        It is true that Mr Foster has no prior conviction for contempt, but that is but a minor matter when one has regard to the particular criminal history which I have related, which includes conduct defiant of court orders or the general law of the land, for example, participating in the management of companies whilst an insolvent contrary to insolvency law.

50        The contempts charged are criminal in nature. They are wilful contempts. That being so, the proceedings, in my view, are intended to serve a punitive function. In this sense they are analogous to proceedings for offences: see in this regard Miller, Contempt of Court, (3rd Ed, paragraph 2.02).

51        Both Mr Foster and the Commission have made reference to particular, other contempt proceedings and penalties imposed. Whilst I have taken these into account, I have done so against the background of not falling into the error of looking to the particular facts of these cases and then deciding whether or not the facts of this case are or are not more or less serious than those facts. The reason why that would be in error is disclosed in a judgment of a Full Court of this Court, which is just as applicable to the question of a penalty to impose in respect of contempt, as it is in respect of other penal jurisdictions exercised by the court: NW Frozen Foods Proprietary Limited v Australian Competition and Consumer Commission (1996) 71 FCR 285 (NW Frozen Foods). In NW Frozen Foods, Burchett and Kiefel JJ observed at 295:

A hallmark of justice is equality before the law, and, other things being equal, corporations guilty of similar contraventions should incur similar penalties: Trade Practices Commission v Axive Pty Ltd (at 42,795). There should not be such an inequality as would suggest that the treatment meted out has not been even-handed: cf the criminal law case Lowe v The Queen (1984) 154 CLR 606. However, other things are rarely equal where contraventions of the Trade Practices Act are concerned. In the present case, differing circumstances, size, market power and responsibility for the contraventions, as well as other factors, complicate any attempt to compare the penalties imposed on the appellant with those imposed on the other corporations.

Another form of comparison is not appropriate. The facts of the instant case should not be compared with a particular reported case in order to derive therefrom the amount of the penalty to be fixed. Cases are authorities for matters of principle; but the penalty found to be appropriate, as a matter of fact, in the circumstances of one case cannot dictate the appropriate penalty in the different circumstances of another case. The point was well made by Spender J in Trade Practices Commission v Annand and Thompson Pty Ltd (at 48,394) when he said:

“Each case must, of course, be viewed on its own facts and facts may be infinite in their variety.”

It follows, as his Honour also said, that “[t]he quantum of penalties imposed in other cases can seldom be of very much direct assistance”.

52        As with a civil penalty proceeding, so with a contempt proceeding, in my view. Contempt cases are rarely equal. Each such case must be viewed on its own facts and penalty assessed accordingly. The position is different under the general criminal law where patterns of offending behaviour are discernible and where Courts of Criminal Appeal, or their equivalent, having regard to particular patterns of offending behaviour, settle upon a range of penalties which are appropriate to behaviours which fall within such a pattern. That is not this case. Truly, the various earlier cases dealing with different contempts in which penalties have been imposed are of little direct assistance.

53        I think recognising this, the Commission found it difficult to put any particular range of penalty which was appropriate. In the end, and feeling constrained so to do, the Commission submitted that a penalty of 18 months imprisonment was apt. In so doing, the Commission acknowledged that that may well be, “on the conservative side”.

54        For his part, Mr Foster, and, as I have said, in a sophisticated way, advanced a submission as to penalty in which he particularly drew my attention to the time which he had served after arrest in prison prior to his release pursuant to the order which I made on 7 December 2011. He also drew to my attention that he had faithfully complied with the requirement that he report daily to police ever since his release pursuant to my earlier order. There is no evidence of non-compliance. I do take this into account. In particular, it seems to me that, when it is in his interest, Mr Foster is disposed to comply with court orders.

55        Another matter to which Mr Foster adverted in his submission on penalty was the prospect of home detention. That was in the context of a submission on his part of a need to care for his mother, in particular and, it seems also to a lesser extent, his sister Jill. I am not persuaded that the Court has power to impose a form of home detention. The provisions of the Crimes Act 1914 (Cth) do not, in my view, apply. This is not a proceeding for an offence against a law of the Commonwealth. Even apart from that, and acknowledging the breadth of the powers conferred on the Court by s 23 of the Federal Court of Australia Act, it does seem to me that the powers to punish for contempt, ultimately referable via the Federal Court of Australia Act, and, in turn, via the Judiciary Act 1903 (Cth) to those enjoyed by the High Court of Justice for England and Wales, do not extend to home detention.

56        In any event, it is not necessary to reach a concluded view on that subject, because I do not regard the case as one which is apt for home detention. It is a case where imprisonment is necessary, and imprisonment in a prison, not at home.

57        The powers which the Court may exercise do though extend, in my view, to an ability to suspend, either wholly or in part, a period of imprisonment. An order suspending in part a sentence of imprisonment for contempt was made by Philippides J in Commissioner of Fair Trading v TLC Consulting Services Proprietary Limited [2011] QSC 374. The power then being exercised by the Queensland Supreme Court was not materially different to that which falls to me to exercise. The question is whether or not any sentence of imprisonment ought to incorporate a period of suspension? In that regard, it is to be recalled that the course of conduct leading to the events charged commenced at a time when Mr Foster was on parole. There is a contingency that Mr Foster might be dealt with for a breach of his parole. It is no part of my function today to deal with him in that regard. That there was a coincidence between parole and embarking on the course of conduct which led to the offending, contumacious conduct does give pause for thought as to whether or not there ought to be a suspension of any period of imprisonment. The view that I have reached is that there ought to be, in the case of Mr Foster, some cause for hope on his part. There are elements in his letter which speak of a sense of hopelessness as to a future on his part. Whilst he has directed, over time, behaviours to non-compliance with the law, he is not a man without talent. He is intelligent and eloquent. It is just that he has directed that intelligence and eloquence, over time and preferentially, to unlawful ends. I take that into account and balance against that, as I have said, the desirability of giving a man hope. The end is a hope on my part that the talents to which I have referred, where Mr Foster has cause for hope, will be directed to lawful ends for the balance of his life.

58        In my view, a head sentence in the order of 18 months imprisonment would not do justice to a contempt which I have described as extremely serious. There is a subterfuge in the conduct which is deeply subversive of the administration of justice, deeply cynical and, as I have observed, mercenary. The conduct concerned, in my view, calls for a head sentence greater than 18 months. The orders that I propose to make in respect of each of the contempts charged are that Mr Foster be imprisoned for a period of three years, the first 18 months to be served in any event. As to that 18 months, I order that time already served by Mr Foster in prison, following his arrest in respect of the charge, count as time served in respect of that 18 month period of imprisonment. As to the balance of the three year period of imprisonment, I direct that the balance of that period of imprisonment be suspended for three years on the following conditions:

(a)    Mr Foster not directly or indirectly engage in or be knowingly concerned in the promotion or conduct by a corporation of any business relating to weight loss, cosmetic or health industry products or services of any kind.

(b)    Commit any criminal offence other than an offence against Transport Operations (Road Use Management) Act 1995 (Qld) or other State or Territory equivalent.

59        I further order that the suspension shall cease and that Mr Foster shall, if a judge so directs, serve all or such part as the judge directs of the remainder of 18 month period not served. I further order that, in the event that after release upon serving 18 months period of imprisonment, Mr Foster complies with the conditions mentioned, any requirement to serve the balance of the period of imprisonment be extinguished.

60        The reasons why I have suspended after serving 18 months liability to serve the balance of the sentence on the conditions mentioned are as follows. As to the first condition, in my view, as a matter of protection to the community generally, there needs to be an appropriately lengthy period of particular restriction. Having regard to past behaviours, the purpose of the second condition is to encourage general compliance with the law of the land. I have expressly made an exemption in respect of what one might term traffic offences which are nonetheless criminal in character because it can, on occasion, fall to any person through inadvertence to breach such a provision. I do not wish to see the balance of the term of imprisonment visited upon Mr Foster for such a breach.

61        Whether or not, in the circumstances, the authorities choose to deal with Mr Foster in respect of a breach of parole is not a matter for me to decide but any such decision will doubtless be informed by the sentencing outcome in respect of the contumacious conduct charged.

62        I further order that a warrant issue for the committal of Mr Foster to prison for a period of 18 months. I order that the existing warrant of imprisonment and the existing arrest warrant, directed as they were to an attendance today, be discharged. In lieu thereof, I order that a fresh warrant for arrest issue.

63        A question as to costs arises. Costs, whilst they fall to discretion, are frequently awarded to those who bring contempt proceedings. The case is one where it is appropriate to make an order for costs in the Commission’s favour. Those costs necessarily, even on taxation, will be substantial. I have taken that into account in deciding nonetheless to impose a period of imprisonment. There is undoubtedly a financial penalty associated with the costs obligation. That alone, though, would not in my view do justice to the particular contempts of which Mr Foster is guilty.

64        The question becomes as to whether or not those costs ought to be ordered to be paid on an indemnity basis? Where a private individual brings a contempt proceeding and where that contempt is found proven, that private individual ought not be left in a position of impoverishment by serving the public interest of vindicating the administration of justice. The Commission’s position is not wholly to be assimilated with a private individual. It has the general task of administering the legislation. That it has served the interests of justice by bringing the proceeding, is undoubted. I do take into account that the Commission is funded from public funds and also, it must be said, at least indirectly, from such penalties if any as are ordered to be paid in proceedings under legislation it administers and find their way into consolidated revenue. The Commission is not to be regarded as self-funding but, nonetheless, penalties do flow to consolidated funds and it is from those funds that the Commission is in turn funded. Taking into account its public funding, I nonetheless have reached the view that this is not a case where I ought to order costs on an indemnity basis. The order will be that Mr Foster pay the costs of and incidental to the proceedings to be taxed.

65        I am going to reserve liberty to apply to each party. Given Mrs Foster’s state of health, I have deliberately reserved liberty to apply both to the Commission and to Mr Foster with the intention that there be an ability on the part of either party to apply to the Court for a particular and exceptional order of release in the event that, for humane reasons and upon cause being shown, it is desirable that, at least temporarily, Mr Foster be released under escort so as to attend either at a funeral or upon a mother who is terminally ill.

Associate:

Dated:    24 October 2013