Federal Court of Australia

Transportable Shade Sheds Australia Pty Ltd v Aussie Shade Sheds Pty Ltd (Contempt Application) [2024] FCA 1112

ORDERS

THE COURT ORDERS THAT:

Withdrawal and joinder applications

1.    The Eighth Respondent be granted leave to withdraw its Submitting Notice filed 3 June 2024 (the withdrawal application) and be joined as an applicant in the proceeding (the joinder application).

2.    Hereinafter the:

(a)    Applicant is to be referred to as the First Applicant; and

(b)    Eighth Respondent is to be referred to as the Second Applicant.

Interlocutory Application for Contempt

3.    The First Applicant’s:

(a)    oral application to adjourn the hearing of the interlocutory application for contempt filed 19 June 2024;

(b)    oral application for leave to amend the statement of charge filed 19 June 2024; and

(c)    the interlocutory application for contempt filed 19 June 2024,

be dismissed.

4.    The First Applicant pay the First, Second and Third Respondents’ costs of the applications in Order 3 as agreed, or failing agreement, to be assessed by a Registrar on a lump sum basis and to be payable forthwith.

5.    The question of whether the costs payable in Order 4 are payable on an indemnity basis be reserved.

Amended pleadings

6.    The Applicants file and serve an Amended Originating Application and Amended Statement of Claim by 27 September 2024.

7.    The Applicants pay the Respondents’ costs thrown away by the amendments to the Originating Application and Statement of Claim on the standard basis, as agreed or assessed.

8.    The Respondents file and serve any Defence or Amended Defence and any Notice of Cross-Claim or Statement of Cross-Claim by 18 October 2024 (and if leave is required to do so, that leave is granted).

9.    The Applicants file and serve any Amended Reply by 1 November 2024.

10.    The Cross-Respondent/s file and serve any Defence to Cross-Claim by 15 November 2024.

11.    The Cross-Applicant/s file and serve any Reply to Defence to Cross-Claim by 29 November 2024.

12.    The costs of and incidental to the withdrawal application and the joinder application be reserved.

Notices of Discontinuance

13.    The First Applicant be granted leave, nunc pro tunc, to file Notices of Discontinuance in respect of:

(a)    Sarah Ellen Leftwich, the Fourth Respondent;

(b)    Ryan Roberts, the Fifth Respondent; and

(c)    Zachary Grassi, the Sixth Respondent.

Discovery

14.    By 4.00 pm AEST on 20 December 2024, the parties give standard discovery pursuant to rule 20.14 of the Federal Court Rules 2011 (Cth) and in accordance with Part 20 Division 20.2 of the Federal Court Rules 2011 (Cth).

Other

15.    The matter be listed for a further case management hearing at 9.00 am AEST on 20 December 2024.

16.    The costs of and incidental to the case management hearing on 19 September 2024 be reserved.

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

ORDERS

THE COURT ORDERS THAT:

1.    The costs referred to in Order 4 of the Orders dated 19 September 2024 be payable on an indemnity basis.

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

REASONS FOR JUDGMENT

DOWNES J:

Synopsis

1    By an originating application dated 19 June 2024, the first applicant (TSS) brought an interlocutory application (contempt application) against the first, second and third respondents (collectively the Contempt Respondents). By the contempt application, TSS complained of non-compliance by those respondents with an order of another judge of this Court which was made on 4 June 2024 (Order).

2    The reasons for the making of the Order, which was made on an urgent ex parte basis, are found at Transportable Shade Sheds Australia Pty Ltd v Aussie Shade Sheds Pty Ltd [2024] FCA 584 (Reasons). It is convenient to adopt the defined terms as they appear in the Reasons.

3    At the hearing of the contempt application, TSS sought an adjournment to either a date in the future or trial and sought to amend the statement of charge to add three additional affidavits upon which it sought to rely, and then (when it lost both of those applications), proceeded with its contempt application against the Contempt Respondents, which it also lost.

4    On 19 September 2024, I made the following orders (inter alia) in relation to the contempt application:

3.    The First Applicant’s:

(a)    oral application to adjourn the hearing of the interlocutory application for contempt filed 19 June 2024;

(b)    oral application for leave to amend the statement of charge filed 19 June 2024; and

(c)    the interlocutory application for contempt filed 19 June 2024,

be dismissed.

4.    The First Applicant pay the First, Second and Third Respondents’ costs of the applications in Order 3 as agreed, or failing agreement, to be assessed by a Registrar on a lump sum basis and payable forthwith.

5.    The question of whether the costs payable in Order 4 are payable on an indemnity basis be reserved.

5    These are my reasons for making those orders. In addition, for the following reasons, I will order that TSS pay the costs of the Contempt Respondents of the three applications on an indemnity basis.

Relevant background

6    A critical document in this case is an agreement entitled “Agreement for Sale of Business Assets and Intellectual Property Rights”, which is described in the Reasons as the sale agreement. Part of the schedule to the sale agreement, entitled “SCHEDULE: Part 1”, listed certain assets (the Assets) which were sold by a liquidator of a group of companies (described as the vendor companies in the Reasons) to what is now the second applicant (previously the eighth respondent) pursuant to the sale agreement. The part of the schedule listing the Assets is replicated in [11] of the Reasons.

7    TSS was incorporated on 5 December 2023, and on 30 May 2024 it entered into a Deed of Grant of Exclusive Licence, described in the Reasons as the exclusive license, by which the second applicant licensed the “intellectual property and associated rights, and authorised its use of trade marks”.

8    Relevantly for the purposes of the contempt application, Jason Diprose was a director of Aussie Shade Sheds from 17 May 2023, but ceased to be a director on 1 March 2024 when he was replaced by Brian Harrison and Sarah Leftwich.

9    Order 1 of the Order states as follows:

Until further order of the Court, the Prospective Respondents [now the first to seventh respondents] (or any of them), whether by themselves, their servants or agents, be restrained, without the licence of the Prospective Applicant [TSS], from making, selling, supplying or otherwise disposing of, offering to make, sell or otherwise dispose of, or using the:

(a)    “Assets” as that term is defined in the Schedule: Part 1 of the “Agreement for Sale of Business Assets and Intellectual Property Rights” (the Sale Agreement), annexed to the affidavit of James Gavin Mogford filed 1 June 2024 (Mogford affidavit) as Annexure “JGM-5”, which includes the database of clients assigned by the Sale Agreement (the TSS database).

(b)    Any product derived, created or made from the intellectual property Assets.

(Emphasis original.)

10    As can be seen from the terms of the Order, the Assets were defined by reference to the sale agreement (including the schedule) discussed above. The Assets themselves were not listed in the Order.

11    The Order also refers to Annexure “JGM-5” to the accompanying affidavit of James Gavin Mogford sworn 31 May 2024 (the First Mogford Affidavit), but rather than referencing the date that affidavit was sworn, it refers to that affidavit as having been filed on 1 June 2024. However, the affidavit was lodged electronically on Friday, 31 May 2024 at 6.14 pm and so, by force of r 2.25(3)(b) of the Federal Court Rules 2011 (Cth), it is taken to have been filed on the next business day for the Registry, which was Monday, 3 June 2024: see Lamb v Sherman (2023) 298 FCR 79; [2023] FCAFC 85 at [35] (Rares, Rofe and Downes JJ).

12    After the Order was made, the First Mogford Affidavit was served without Annexure “JGM-5”. Instead, the sale agreement was described as “Confidential Annexure ‘JGM-5’” with a notation that the removal was pursuant to the Order. Although the Order contained suppression orders, these did not relate to the sale agreement or Annexure “JGM-5”.

13    The statement of charge which was filed with the contempt application contains a single charge as follows:

That the First Respondent to the Seventh Respondent (or either of them) (the Relevant Respondents) disobeyed Order 1 of the orders of Justice Collier made on 4 June 2024 (the Order) whereby, the Relevant Respondents, until further order of the Court, whether by themselves, their servants or agents, were restrained, without the licence of the Applicant, from making, selling, supplying or otherwise disposing of, offering to make, sell or otherwise dispose of, or using:

(a)    the “Assets” as that term is defined in the Schedule 1: Part 1 of the “Agreement for Sale of Business Assets and Intellectual Property Rights” (the Sale Agreement), annexed to the affidavit of James Gavin Mogford filed 3 June 2024 (Mogford affidavit) as Annexure “JGM-5”, which included the database of clients assigned by the Sale Agreement (the TSS database).

(b)    any product derived, created or made from the intellectual property Assets.

(Emphasis omitted.)

14    The statement of charge contains the following particulars:

1.    The Applicant refers to, repeats and relies upon the instances of disobedience after the date of the Order set out in:

(a)    the affidavit of James Gavin Mogford, filed herein on 19 June 2024 paragraph 3 Column G of the Table contained in Annexure “JGM-1”;

(b)    the affidavit of Rebecca Galston [sic] filed herein on 19 June 2024 paragraphs 2 through 9.

2.    The dates upon which the First Respondent disobeyed the Order are 17 and 18 June 2024 and appear as the title of Column G in the Table.

Application to amend statement of charge and adjournment application

15    At the commencement of the hearing, counsel for TSS, without notice to the Contempt Respondents, applied to amend the statement of charge. When I asked why the application had been made without notice to the Contempt Respondents, the following exchange occurred:

DR ELIADES: We didn’t foreshadow, because we identified, in preparation for today’s hearing, that there was a patent defect in the affidavit that was served. And that defect was a reference to an annexure which was the sale agreement between the eighth respondent and the liquidator, which itemised the intellectual property assets which were the subject of the sale.

HER HONOUR: So what was the defect?

DR ELIADES: The effect of that

HER HONOUR: No, what was the defect?

DR ELIADES: The defect was that for some reason, that annexure was removed and a statement put on there that it was a confidential annexure pursuant to the orders of Collier J. And that was erroneous. It was not.

16    When I asked what the proposed amendment was, TSS had not prepared or formulated one.

17    However, in essence, TSS sought to have the statement of charge amended to include reference to three additional affidavits upon which it sought to rely at the hearing of the contempt application. TSS submitted that these affidavits demonstrate the knowledge of the Contempt Respondents, being their awareness of the content of the schedule to the sale agreement referred to in the Order which had not been served. It was also submitted that these affidavits were such that they should be responded to by the Contempt Respondents, who would then be made available for cross-examination on those affidavits. It was for this reason that the adjournment of the contempt application was sought.

18    On the basis of those submissions, I suggested that TSS was seeking that a new paragraph be inserted into the statement of charge in these terms:

The Applicant refers to, repeats and relies upon the [additional affidavits] in order to establish that the [Contempt] Respondents had knowledge of the “Assets” as that term is defined in the Sale Agreement.

19    Counsel for TSS accepted that this was the form of the amendment which was sought. He also appeared to accept that, if the amendment was not permitted, TSS would not be able to rely upon the three further affidavits on the contempt application, which position accords with r 42.12(b) of the Federal Court Rules.

20    For the following reasons, I refused the application to amend the statement of charge and, for that reason, the application to adjourn the hearing of the contempt application.

21    First, the form of the statement of charge did not comply with r 42.12(a) of the Federal Court Rules, both in its original form and in its proposed amended form. That is because, in its original form, the particulars referred to affidavits said to contain the “instances of disobedience” which particulars were insufficient to identify the alleged conduct said to be the acts of contempt. For example, the cited paragraphs of the affidavits contained no reference to Mr Diprose and Mr Harrison, and how it was that they had disobeyed the Order in their personal capacity, or the facts relied upon to allege that the documents sent by Aussie Shade Sheds to Ms Galton by other employees constituted acts which were a “wilful disobedience of the order (i.e., disobedience that is not casual, accidental or unintentional)” by Aussie Shade Sheds: see PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission (2020) 145 ACSR 5; [2020] FCA 685 at [47] (Yates J). Similarly, the global reference to affidavits in the proposed amendment was inadequate to comply with r 42.12(a). The Contempt Respondents should not be required to fish through affidavits to attempt to understand the allegations against them. If r 42.12(a) is not complied with, the Contempt Respondents are not put on proper notice of the case which they have to meet, which is essential: see Mensink v Registrar of the Federal Court of Australia [2024] FCAFC 124 at [40]–[41] (Abraham, Hespe and Neskovcin JJ) citing Coward v Stapleton (1953) 90 CLR 573 at 579–580 (Williams ACJ, Kitto and Taylor JJ).

22    That the proposed amendment was deficient was exemplified by the submissions which were made by counsel for TSS when I was taken to the three additional affidavits proposed to be added by the amendment. Although the amendment would refer to the three affidavits in toto, it became apparent from the oral submissions advanced by counsel for TSS that only particular paragraphs of those affidavits were intended to be relied upon by TSS.

23    Second, had the amendment been allowed, the additional affidavits would not have been admitted into evidence in any event. That is because their content fell far short of constituting cogent evidence sufficient to ground a conclusion to the required standard that the Contempt Respondents had knowledge of the “Assets” as that term is defined in the sale agreement.

24    To put this into context, at the time of the alleged conduct said to be in contempt (being during the time period from about 4 June 2024 to 19 June 2024), Mr Diprose was not a director of Aussie Shade Sheds. Instead, according to TSS, he was the sole shareholder of a company which was itself the sole shareholder of Aussie Shade Sheds. Counsel for TSS submitted that, because of this fact, Mr Diprose was the “controller” of Aussie Shade Sheds. However, as was canvassed during the hearing, the fact that a person is the sole shareholder of a company (or, as in this case, the sole shareholder of the sole shareholder of a company) does not mean that the person is the “controller” of the company (whatever that means) or that, without more, that person’s knowledge can be imputed to the company: see QBE Underwriting Ltd v Southern Colliery Maintenance Pty Ltd (2018) 97 NSWLR 459; [2018] NSWCA 55 at [95] (Leeming JA, with whom Macfarlan and Payne JJA agreed).

25    Counsel for TSS also submitted that Mr Diprose was a de facto director of Aussie Shade Sheds. The only evidence to which he could take me to support this submission was a statement by Mr Diprose to Ms Leftwich for the purposes of encouraging her to become a director of the company, namely that “even though [Mr Harrison] and [Ms Leftwich] would be directors of [Aussie Shade Sheds], [Mr Diprose] would still be running the show, and would be around as the owner of the business”. However, any such statement would have been made prior to 1 March 2024. It does not follow from such a statement that, as a matter of fact and as at June 2024, Mr Diprose was acting as a de facto director of Aussie Shade Sheds. More than this is required. As discussed above, his once-removed status as a shareholder is not sufficient.

26    I will now address the content of the additional affidavits in more detail.

27    The first affidavit was that of Ms Leftwich affirmed 12 August 2024. Ms Leftwich was appointed a director of Aussie Shade Sheds on 1 March 2024, but resigned as a director with effect from 8 April 2024. The paragraphs sought to be relied upon by TSS were said to commence at [17] of her affidavit. In summary, Ms Leftwich deposed to agreeing to become a director of Aussie Shade Sheds, and to having a conversation with Mr Sanders (another employee, not a Contempt Respondent) in March 2024 about a letter of demand received from McKays Solicitors on behalf of the second applicant. The conversation with Mr Sanders is irrelevant as more would be needed to impute his knowledge to Aussie Shade Sheds as at June 2024. At best for TSS, the details of the conversation with Mr Sanders provide context for a subsequent discussion which Ms Leftwich said that she had with Mr Diprose on an unidentified date after her conversation with Mr Sanders. That conversation was said to be in these terms:

He (the Second Respondent) explained to me that the First Respondent’s point of difference was that all its sheds would achieve a C1 or C2 wind classification, and so could be sold to more rural or exposed sites. Accordingly, the First Respondent had arranged its own plans and engineering for the sheds being sold, and so the allegations made by the [Second Applicant] were false.

28    Ms Leftwich then deposed that:

That explanation seemed reasonable to me, as when I had first joined the First Respondent, I had processed several invoices rendered by engineers totalling $40,000 at the Second Respondent’s direction which appeared to relate to preparing engineering drawings for the First Respondent’s sheds.

29    The probative value of this evidence is so tenuous that, had I allowed the amendment to the statement of charge, I would have exercised my discretion to exclude this evidence pursuant to s 135 of the Evidence Act 1995 (Cth), as its probative value is substantially outweighed by the danger that the evidence might be unfairly prejudicial to the Contempt Respondents, be misleading or confusing and cause or result in undue waste of time. That is because Mr Diprose was not a director of Aussie Shade Sheds in June 2024, or even during the conversation that he had with Ms Leftwich in or after March 2024, and (for the reasons given above) there is no proper basis to assert that the knowledge of Mr Diprose could somehow be imputed to Aussie Shade Sheds, such that, in a manner which was not made clear through submissions, his conversation with Ms Leftwich demonstrated knowledge by Aussie Shade Sheds of the Assets as at June 2024. Nor does this evidence establish that Mr Diprose was personally aware of the Assets as at June 2024 as the evidence did not establish that Mr Diprose had read the letter from McKays Solicitors. Further, even if Mr Diprose had read it, the letter did not contain a list of the Assets but referred to them in a summary way.

30    The next affidavit was that of Ryan Roberts affirmed 16 August 2024. Counsel for TSS submitted that the relevant part of this affidavit was [10], which stated as follows:

At all times I was of the belief that ASS had purchased the Intellectual Property of TSS because Danny Key told me that was the case as did Jason Diprose. I also recall a specific instance where I queried with Mark Sanders, who was a senior manager of ASS, why engineering drawings were having old TSS related logos removed prior to lodgement with council. Mark Sanders told me “its not a problem, we own the I.P we’re still just catching up on getting our own logo on the drawings”.

31    However, the statement by Danny Key is irrelevant, and the conversation with Mr Sanders is also irrelevant. This means that we are left with an alleged statement by Mr Diprose on an unidentified date that Aussie Shade Sheds had purchased unidentified intellectual property of TSS, which evidence is so vague as to be meaningless.

32    The second part of this affidavit relied upon was [12(c)] in which Mr Roberts referred to a conversation that he had with Mr Mogford on 8 March 2024, in which he referred to “the owner” of Aussie Shade Sheds as having requested him to copy the database of customers and work orders in progress. Mr Roberts states that the reference to “the owner” was to Mr Diprose. I was not persuaded that this evidence was relevant to the contempt application, which did not relate to any such database or to work orders.

33    These matters have the consequence that, had I allowed the amendment to the statement of charge, I would have exercised my discretion pursuant to s 135 of the Evidence Act to exclude this evidence as its probative value is substantially outweighed by the danger that the evidence might be unfairly prejudicial to the Contempt Respondents, be misleading or confusing and cause or result in undue waste of time.

34    The final affidavit is that of William Cotter sworn 21 August 2024. The first paragraph relied upon is [2], insofar as it refers to Mr Cotter being appointed the liquidator of Bend-Tube Designs Pty Ltd. The relevance of that fact concerns the reference to Bend-Tube Designs Pty Ltd appearing on a drawing used by Aussie Shade Sheds. However, this evidence does not support the basis of the tender of the evidence, being the awareness of the Contempt Respondents of the Assets. It should have been included in the original statement of charge as required by r 42.12(b) of the Federal Court Rules. No explanation was provided as to why it was not so included.

35    TSS also relied upon [7] of Mr Cotter’s affidavit, which stated as follows:

My firm has records to show that the only contact we received from any representative of HEKA Group was from a Jason Diprose on 17 April 2023 which appears to have been in relation to the sale of equipment assets. We responded to his initial enquiry via email but never heard back from him.

36    Counsel for TSS submitted that, although this evidence refers to equipment assets and not intellectual property assets, it shows an awareness by Mr Diprose that the assets of the vendor companies were being sold by the liquidator. However, the evidence in this paragraph is irrelevant to the substance of the contempt allegations which relate to the alleged use of intellectual property by the Contempt Respondents. It goes nowhere.

37    Passing reference was also made to [8] of Mr Cotter’s affidavit in the written submissions advanced by TSS. However, it was unclear from the oral submissions whether this paragraph was pressed. In any event, [8] does not assist TSS in demonstrating awareness by the Contempt Respondents of the Assets.

38    For these reasons, had I allowed the amendment to the statement of charge, I would have exercised my discretion to exclude [7] and [8] of Mr Cotter’s affidavit pursuant to s 135 of the Evidence Act 1995 (Cth), as the probative value of this evidence is substantially outweighed by the danger that the evidence might be unfairly prejudicial to the Contempt Respondents, be misleading or confusing and cause or result in undue waste of time.

39    As the amendment application failed, there seemed no proper reason to adjourn the contempt application, particularly to enable the Contempt Respondents the opportunity to respond to affidavits which TSS was not going to be permitted to rely upon at the hearing.

Contempt application

40    For the following reasons, the contempt application was dismissed.

41    The Order was not clear, unambiguous or capable of compliance, and it was not served on the Contempt Respondents. These matters are some of the necessary elements a complainant must establish in order to make good a charge of civil contempt, and they must be proved beyond reasonable doubt: see Connect TV Pty Ltd v All Rounder Investments Pty Ltd (No 3) (2013) 301 ALR 537; [2013] FCA 98 at [42] (Tracey J) citing Advan Investments Pty Ltd v Dean Gleeson Motor Sales Pty Ltd [2003] VSC 201 at [31]–[32] (Gillard J).

42    That is because of the erroneous reference in the Order to the First Mogford Affidavit as having been “filed 1 June 2024” (being an affidavit which does not exist), and, more importantly, the failure of TSS to serve Annexure “JGM-5” to the First Mogford Affidavit on the Contempt Respondents.

43    To overcome the latter defect, TSS contends, in effect, that the Contempt Respondents were otherwise aware of the content of the schedule to the sale agreement (that is, they were aware of the Assets).

44    First, TSS submitted that the Contempt Respondents could review the Reasons and ascertain by reading them what the list of assets was (because the list appears at [11] of the Reasons). However, that they could have done something does not mean that they did. I reject that submission.

45    Second, TSS submitted that the exclusive licence was an annexure to the First Mogford Affidavit and that this annexure was served with the Order. It was submitted that, because the schedule to the exclusive licence contained a list of the intellectual property assets which were acquired pursuant to the sale agreement, the Contempt Respondents would know from reading the exclusive licence of the description of least some of the Assets listed in the schedule to the sale agreement.

46    For the following reasons, I also reject this submission.

47    The schedule to the exclusive licence appeared at page 72 of about 474 pages of the First Mogford Affidavit (at least as filed). It is a one-page list which spans from (a) through to (l), and which relevantly contains the following items (being the items relied upon by TSS):

(e)    Any Intellectual Property (including available designs, plans and engineering drawings as inspected by the Purchaser);

…

(g)    The registered design rights (namely 202116751, 202116750, 202116749, 202116748, 202016631, 202016630, 202016585, 202015137, 202014149, 202014148, 202014147, 202014146 and 202014145);

…

(k)    All the Vendors’ policies and procedures which were held by the Liquidator in electronic format as at the date of Completion; and

(l)    All other documentation (but excluding financial information, private or confidential information, or documents subject to legal professional privilege) of the Vendors used in the ordinary course of operating the business of the Vendors which were held by the Liquidator in electronic format as at the date of Completion.

48    However, the descriptions of the assets in this list are ambiguous, and in some respects vague (which in turn render the terms of the Order unclear). For example, what does “available” designs, plans and engineering drawings mean? What other intellectual property is being referred to which is not identified in (e) (noting the reference to “including”)? Further, other than the registered design rights, all of the descriptions have qualifying words at the end such as “as inspected by the Purchaser” or “which were held by the Liquidator in electronic format as at the date of Completion”. TSS adduced no evidence to show that any of the Contempt Respondents knew that these qualifications were satisfied in relation to any particular document. Further, these qualifications render the terms of the Order unclear and ambiguous.

49    It follows that TSS failed to establish that the Contempt Respondents were aware of the “Assets” as referred to in the Order.

50    A further reason to dismiss the contempt application was that the evidence contained in the affidavits which were listed in the statement of charge was inadequate to demonstrate beyond reasonable doubt that there has been a civil contempt involving a breach of order of the Court.

51    The statement of charge cites paragraphs 2 to 9 of the affidavit of Rebecca Galston [sic] as containing particulars of the “instances of disobedience” of the Order. In her affidavit, Ms Galton described herself as a “Marketing Manager of Moggys Group”. She gave evidence about being supplied certain items by employees of Aussie Shade Sheds after the Order was made, and this was relied upon by TSS as being instances of disobedience of the Order.

52    Ms Galton deposed that some of these items, namely photographs and “shed assembly instructions”, are owned by TSS “as they were purchased from the Liquidator” or simply “purchased from the Liquidator”: see [4] and [8] of the affidavit of Ms Galton sworn 19 June 2024. The basis on which this witness is able to attest to the ownership by TSS of these items and the fact that they were purchased from an unidentified liquidator on an unidentified date is neither apparent nor explained. For that reason, I place no weight on this evidence.

53    Similarly, Ms Galton deposed that certain plans were “purchased from the Liquidator by the Applicant”: see [9] of the affidavit of Ms Galton sworn 19 June 2024. Again, the basis on which this witness is able to attest to the fact that these plans were purchased from an unidentified liquidator on an unidentified date is neither apparent nor explained. For that reason, I place no weight on this evidence.

54    Of course, even on its own case, TSS was not a party to the sale agreement. Rather, the second applicant entered the sale agreement, and later entered into the exclusive licence by which the second applicant licensed certain intellectual property rights to TSS. Thus, based on its own case, TSS did not purchase anything from the liquidator. This provides a further reason to reject anything which Ms Galton has to say about the ownership status of these items and the manner in which TSS became the owner of them.

55    A further problem with Ms Galton’s evidence generally is that no link is established between the documents provided to her by Aussie Shade Sheds and the Assets listed in the schedule to the sale agreement. Rather, to be meaningful, the evidence requires that an inference be drawn that her reference to the items being purchased from the liquidator is intended to be a reference to the purchase being made by the second applicant from Mr Cotter pursuant to the sale agreement and that the relevant item falls within the scope of Assets as defined in the sale agreement. However, the evidence is too vague and uncertain for such an inference to be safely drawn.

56    Further, all of the interactions which Ms Galton had with Aussie Shade Sheds were with other employees and not with Mr Diprose or Mr Harrison, and there is no evidence that either of Mr Diprose or Mr Harrison (or any person whose state of mind can be attributed to Aussie Shade Sheds) were involved in, or were aware of, the interactions between Ms Galton and these other employees of Aussie Shade Sheds.

57    For these reasons, the evidence of Ms Galton does not establish that any of the Contempt Respondents breached the Order.

58    The second affidavit cited in the statement of charge as containing particulars of the “instances of disobedience” of the Order is the affidavit of Mr Mogford filed on 19 June 2024 (Second Mogford Affidavit) “paragraph 3 Column G of the Table contained in Annexure ‘JGM-1’”.

59    Paragraph 3 of the Second Mogford Affidavit refers to Column G as “documents published by [Aussie Shade Sheds] on its website as at 17 June 2024, or sent to [TSS] on 18 June 2024”. It too suffers from significant defects, namely:

(1)    TSS submitted that the reference by Mr Mogford to documents sent to the Applicant on 18 June 2024 is a reference to the evidence of Ms Galton; however, Ms Galton made no reference to being sent any documents on 18 June 2024.

(2)    Neither [3] nor Column G establish that any of the “documents” in Column G fall within the scope of Assets as referred to in the Order.

(3)    Many of the screenshots of the website do not depict “documents”. Rather, there are photographs, contact information, advertising blurb and information about how to place an order. It is therefore unclear what TSS claims are the documents which fall within the scope of Assets as referred to in the Order or how depicting these on the website constitutes a breach of the Order by the Contempt Respondents.

(4)    There is no evidence that either Mr Diprose or Mr Harrison (or any person whose state of mind can be attributed to Aussie Shade Sheds) was involved in, or was aware of, the content of the Aussie Shade Sheds website and that it depicted documents which fell within the scope of Assets as referred to in the Order.

Costs

60    At the hearing, I made an order that TSS pay the costs of the Contempt Respondents in relation to the contempt application and the applications to amend the statement of charge and adjourn the contempt application, but I reserved the question of whether such costs would be on the indemnity basis or on the standard basis.

61    Having reflected on the matter, I consider that the circumstances of this case are such as to warrant an order that the costs be paid on an indemnity basis. That is because, properly advised, TSS ought never to have brought this contempt application at all or, upon the defect in service being discovered, TSS should have withdrawn it instead of taking the course of action which it did.

62    The first step before accusing someone of breaching an order of the Court, and making serious allegations of contempt, is to ensure that the order alleged to have been breached has been served. That was not done, and, according to TSS, the defect in the service of the First Mogford Affidavit, which accompanied the Order, was only discovered approximately a week or so before the hearing of the contempt application and during preparation.

63    Once the defect was discovered, the application ought to have been withdrawn. This is especially as, for the reasons given above, the evidence upon which TSS relied for the purposes of proving the contempt was inadequate to demonstrate that there had been a breach of the Order, let alone one which even arguably met the required standard of proof for an allegation of contempt.

64    Instead of withdrawing the contempt application, as it ought to have done, TSS doubled down and applied to amend the statement of charge at the hearing of the contempt application to rely upon three further affidavits, without notice to the Contempt Respondents, and also applied to adjourn the contempt application. This was in circumstances where TSS had sought the hearing of the contempt application ahead of trial, when there were no circumstances of urgency, and where the contempt application had been hanging over the heads of the Contempt Respondents for some three months.

65    The additional evidence which TSS sought to rely upon and which was the subject of the amendment application also had serious deficiencies, which are identified above. For this reason, properly advised, TSS ought not to have brought the amendment application or sought to rely on this material or applied to adjourn the hearing of the contempt application.

66    For the same reasons that indemnity costs are appropriate, it was appropriate to order that the costs be payable forthwith. The Contempt Respondents should not be required to wait until the conclusion of the proceeding to recover their costs associated with the contempt application in circumstances where it should never have been brought in the first place based on the evidence identified in the statement of charge.

Associate:

Dated:    24 September 2024

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