Conclusion
142 For these reasons, as well as those given by Ipp JA, I agree with the orders proposed by Ipp JA.
143 HANDLEY AJA: In this matter I have the misfortune to differ from my bretheren on the competency of the appeal and the existence of undertakings to the Court impliedly given by the respondents about the use of documents produced by the plaintiffs to the solicitors for Luna Park Sydney Pty Ltd (the Company) in the course of the principal proceedings.
144 The facts and the history of the proceedings are set out in the judgment of Ipp JA and will not be repeated in this judgment unless this is necessary.
145 "The differences upon which the distinction between civil and criminal contempt is based are, in significant respects, illusory". So said Brennan, Deane, Toohey & Gaudron JJ in their joint judgment in Witham v Holloway (1995) 183 CLR 525, 534 (Witham). However intermediate appellate Courts must continue to make this distinction when determining whether an appeal lies from the dismissal of proceedings for contempt of Court. It is enshrined in s.101(5) and (6) of the Supreme Court Act which only permit an appeal to this Court from a dismissal in cases of civil contempt. However as the majority said in Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98, 108 (Mudginberri):
"… very great difficulty has been experienced in maintaining the distinction between civil and criminal contempts and, in particular, in elaborating a precise and certain criterion which divides one class of contempt from the other."
146 The characterisation must begin with the distinction between contempts arising from disobedience to an order or an undertaking to the Court by a party bound (herein order) and other contempts which obstruct or interfere with the course of justice: Witham (at 530). The former can be provisionally characterised as civil contempts while the latter are always criminal.
147 The distinction has its difficulties because a person who is not bound but knowingly assists the party bound to commit a breach or who independently causes the order to be thwarted (A-G v Times Newspapers Ltd [1992] 1 AC 191, 206, 214, 217-8, 229-30) is guilty of a criminal contempt: ibid at 203, 207, 209, 211, 214, 218, 227; Mudginberri at 108.
148 Such acts are criminal contempts because they interfere with and obstruct the course of justice: Mudginberri at 106, Witham at 530, A-G v Times Newspapers Ltd at 203, 209, 220, 221, 227.
149 The power of the Court to deal with third parties whose acts cause a breach of an injunction, although they are not personally bound by it, was confirmed in Seaward v Paterson [1897] 1 Ch 545 CA. An injunction had been granted to a landlord which restrained the tenant Paterson from committing breaches of his covenant not to cause a nuisance. The nuisance complained of was caused by boxing matches on the premises. Further boxing matches were held and the landlord applied to have the tenant, one of his employees, and a third party committed for contempt. North J. committed all three to prison and the third party appealed. Lindley LJ said at 554-6:
"… let us consider what jurisdiction the Court has to make an order against [the appellant]. There is no injunction against him - he is no more bound by the injunction granted against Paterson than any other member of the public. He is bound, like other members of the public, not to interfere with, and not to obstruct the course of justice … A motion to commit a man for breach of an injunction, which is technically wrong unless he is bound by the injunction, is one thing; and a motion to commit a man for contempt of Court, not because he is bound by the injunction by being a party to the cause, but because he is conducting himself so as to obstruct the course of justice, is another and a totally different thing ... In the one case, the party who is bound by the injunction is proceeded against for the purpose of enforcing the order of the Court for the benefit of the person who got it. In the other case the Court will not allow its process to be set at naught and treated with contempt."
150 In some cases disobedience to an order by the party bound is arbitrarily characterised as a criminal contempt even if it is not contumacious: Mudginberri (at 107); Witham (at 530). These cases include wrongful interference with a ward of Court, disobedience to orders forbidding molestation or for delivery up of a child, and contempts by officers of the Court and others in a special relationship with it such as solicitors and liquidators.
151 A party is guilty of contempt if his breach of the order was not casual, accidental, or inadvertent: Mudginberri (at 107). If his disobedience is contumacious or accompanied by deliberate defiance of the Court or its authority the contempt is no longer purely civil: Witham (at 530). As the majority said in Mudginberri (at 110):
"…where there has been wilful disobedience to an order of the court and a measure of contumacy … civil contempt has a dual character, namely, (a) as between the parties to the proceedings, the element of civil execution and (b) as between the party in default and the State, a penal or disciplinary jurisdiction to be exercised by the court in the public interest. In such a case, at least, 'civil contempt bears much the same character as criminal contempt'."
152 Mudginberri and Witham emphasised the criminal aspects of contempt by disobedience to an order. A fine is a form of punishment: Witham (at 534), but Mudginberri established that fines could be imposed for continuing wilful disobedience to enforce compliance (at 115). This reflected the majority's view (at 109):
"There is … much to be said for the view that all contempts should be punished as if they are quasi-criminal in character."
153 The majority also said (at 108):
"The concept that disobedience to an order becomes criminal when the primary purpose of exercising the power changes from vindication of the rights of the plaintiff to vindication of the authority of the court is both complex and artificial. Salmon LJ was right when he said in Jennison v Baker [1972] 2 QB at 64, speaking with reference to the enforcement of an injunction generally, that 'the two objects are, in my view, inextricably intermixed'."
154 The point was developed in Witham (above at 532-4):
"The distinction between proceedings in the public interest and those that are coercive or remedial in the interest of the private individual is not, in our view, a satisfactory basis for the distinction usually made between civil and criminal contempt … the distinction does not support the general proposition that breach of an order in civil proceedings is a civil contempt … At best, the distinction … supports a separate category of civil contempt to the extent that it clearly appears that the proceedings are remedial or coercive in nature … However, in our view, there are fundamental problems even with that approach. One problem is that there is not a true dichotomy between proceedings in the public interest and proceedings in the interest of the individual ... there is considerable difficulty with the notion that, in some cases, the purpose or object of the proceedings is punitive and, in others, the purpose or object is remedial or coercive … It is necessary to acknowledge, as it was in Mudginberri , that punitive and remedial objects are, in the words of Salmon LJ 'inextricably intermixed'" (emphasis supplied).
155 In Witham the majority (at 534), with the concurrence of McHugh J, held that the criminal onus applied in all contempt cases. There is no separate category of civil contempts where the civil onus applies.
156 Although the separate category of civil contempt noted in Witham (at 532) "where it clearly appears that the proceedings are remedial or coercive" in the interest of a private individual does not attract the civil onus it nevertheless offers a principled and workable distinction between civil and criminal contempt for present purposes. As the majority said in that case (at 532), breach of an order is not always a civil contempt.
157 In my judgment the distinction determines whether an appeal lies to this Court from the dismissal of proceedings for contempt.
158 That test is supported by persuasive dicta in this Court. In John Fairfax Publications Pty Ltd v A-G (NSW) [2000] NSWCA 198 (2000) 181 ALR 694 Spigelman CJ said (para 5) that s.101A(11) of the Supreme Court Act "applies only to contempt proceedings for what would, traditionally, have been regarded as a criminal contempt, namely proceedings which are not remedial or coercive in the interest of a private individual."
159 Recently in Markisic v Commonwealth of Australia [2007] NSWCA 92 Campbell JA said, with the concurrence of myself and Bell J:
"[57]. I incline to the view that the present proceedings are a criminal charge of contempt, because they are not remedial or coercive in the interests of a private individual. They seem to relate to alleged past breaches, and the punishment that is sought to be imposed seems to be simply for the purpose of punishing those breaches, rather than as a means of inducing the Commissioner to comply with the terms of the subpoena in a way that he had not previously done.
160 These dicta are consistent with the decision in Microsoft Corporation v Marks (No. 1) (1996) 69 FCR 117 where the Full Federal Court upheld the competency of an appeal. Beaumont J, who delivered the principal judgment, quoted (at 127) earlier dicta in that Court that "civil contempt primarily exists to make the administration of justice effective for the individual litigant".
161 He referred (at 135-6) to English cases which held that the contempt is criminal if, as a matter of substance, "the object of the application was to obtain the punishment of the [contemnor]". Beaumont J concluded (at 136):
"… the 'substance' or 'object' test is appropriate in our context also. That is to say, if, in substance, the proceedings at first instance were criminal in the sense that their object was to punish then … no appeal could lie. On the other hand, if the substance and object of the proceedings were remedial, an appeal was competent."
162 The test is applied when the contempt proceedings are instituted (at 137).
163 Microsoft owned the copyright in certain computer programs and had obtained injunctions which restrained Marks from reproducing them and selling unauthorised copies. Its proceedings for contempt for alleged breaches of both orders were dismissed. Beaumont J. concluded (at 137):
"In characterising the proceedings, it is material … to take into account … that the moving party was trading, and may be expected to continue to trade. This is consistent with Microsoft's substantial object…being viewed as remedial rather than punitive in character. This also underlines the significance of the proceedings to … Microsoft (ie a civil contempt) as distinct from the more general interest of the public in the due administration of justice (ie a criminal contempt)".
164 That was a clear case. Microsoft obtained the injunctions to protect its business and copyrights, and had a continuing interest in those orders being obeyed. The contempt proceedings were not simply for the punishment of past breaches but were calculated to deter and prevent future breaches which would injure its business.
165 In O'Shea v O'Shea (1890) 15 PD 59 CA, 62 Cotton LJ said that proceedings for civil contempt were "really only a procedure to get something done in the action" and the proceedings before the Court were for criminal contempt because their purpose (at 63) was "not to obtain the doing of anything for the petitioner's benefit." In Seaward v Paterson [1897] 1 Ch 545 CA, 555-6 Lindley LJ distinguished proceedings brought "for the purpose of enforcing the order … for the benefit of the person who got it". In Phonographic Performance Ltd v Amusement Caterers (Peckham) Ltd [1964] Ch 195, 199 Cross J, in a passage adopted by the majority in Mudginberri (at 110), described proceedings for civil contempt as a form of civil execution.
166 In my judgment the correct test for determining the competency of this appeal is that favoured by Spigelman CJ, Campbell JA, and the Federal Court. Proceedings for contempt for breach of an order, outside the established exceptions, are civil if they are remedial or coercive in the interest of a litigant but otherwise they are criminal. Such proceedings need not be in the interests of a "private individual", because they may be brought by a corporation or a government in its capacity as a litigant.
167 The application of this test leads to the conclusion that these proceedings, when commenced in March 2006, were for criminal contempt. The breaches relied on occurred in June and September 2005 and involved the disclosure of witness statements and an expert report to a Minister of the State Government and her official staff. The disclosures were made to persuade the Government to legislate to protect the company against the principal proceedings and to help the Minister promote that legislation in the Parliament. Their efforts were successful and the Luna Park Site Amendment (Noise Control) Act (the Act) was assented to on 15 October 2005.
168 The respondents were aware of the implied undertakings but did not give evidence. The appellants did not seek injunctions against further breaches by the Company or against further disclosures by the respondents. There is power to grant such injunctions: Arlidge, Eady & Smith on Contempt 2nd ed 1999 pp 876-7; Borrie & Lowe Law of Contempt 3rd ed 1996 p639; Australian Consolidated Press Ltd v Morgan (1965) 112 CLR 483, 503.
169 The past breaches by the respondents, if such they were, could not be remedied. This was also the situation in Witham where the majority said (at 532):
"… there are some circumstances in which the breach simply cannot be remedied. That can be illustrated by reference to the orders in this case. The order that the appellant not deal with his assets in a way that reduced their value below $200,000 could not be remedied once his assets were reduced in such a way that he was in no position to raise that, or any lesser sum of money, to satisfy the judgment debt. And when the contempt proceedings were commenced, ie after judgment had been entered and the appellant's total inability to satisfy the judgment ascertained, the purpose of the disclosure order could no longer be achieved."
170 The principal proceedings were continuing on other issues. Mr Alexis SC for the appellants submitted that the contempt proceedings were coercive because they would secure for the appellants the full benefit of the undertakings in future. This appeared plausible until Mr Parker SC for the respondents referred us to correspondence between the solicitors shortly before the contempt proceedings were commenced.
171 On 2 March 2006 the solicitors for the appellants wrote to the solicitors for the company complaining of breaches of the undertaking in June and September the previous year when documents were given to the Minister and her official staff. On 9 March the solicitors for the company apologising on its behalf for the breaches saying they would bring the matter to the attention of Brereton J, who was case managing the principal proceedings, and offer a public apology. This occurred on 20 March. The contempt proceedings were commenced on 15 March but the company which had admitted breaches of the undertaking was not joined.
172 There had been an earlier breach by the company when affidavits that had not been read in Court were given to the media. The company's solicitors wrote on 20 April 2005, to apologise and gave an express undertaking not to give unread affidavits to the media or any other person who was not connected to the proceedings.
173 Following the passing of the Act the respondents had no need to make further disclosures to the Minister or her staff, and there was no evidence of anything that might tempt them to do this again.
174 The clear impression those letters convey to me is that the purpose of the foreshadowed contempt proceedings was to punish the respondents.
175 An order against a company extends to the acts and omissions of its servants and agents acting in that capacity. If the disclosures by the respondents were breaches of its undertakings the company was guilty of contempt of court and coercive and injunctive relief could have been sought against it.
176 This is established by Heatons Transport (St Helens) Ltd v The Transport and General Workers Union [1973] AC 15 where a trade union was held liable in contempt for action by its shop stewards which had not been authorised by its General Executive Council. Lord Wilberforce speaking for the Appellate Committee, said (pp98-100):
"The union's contention is that the only remedy is against the shop stewards: the appellants seek to make the respondent union responsible. The essential issue is therefore one of authority; the authority of the shop stewards to take the action complained of on behalf of the union … in each case the test to be applied is the same: was the servant or agent acting on behalf of, and within the scope of the authority conferred by, the master or principal? … there are cases in which an agent who is not a servant does have authority of considerable generality. He may be elected or appointed to some office or post for a substantial period … and he may have to exercise a discretion in dealing with a series of situations as they arise. The position of such an agent and the scope of his authority are very similar to those of a servant."
177 In view of the earlier breaches in 2005 and the admissions and apologies in the letters from the company's solicitors of 20 April 2005 and 9 March 2006, any further breaches for which the company was responsible in all probability would attract severe punishment. This was likely to cause financial loss to the company and its owners apart from the risks the respondents would face personally under the principles in Seaward v Paterson. These were powerful deterrents against any further breaches of the undertakings.
178 If the real purpose of the appellants had been to secure the full benefit of the undertaking in the future this could have been achieved at minimum cost by contempt proceedings against the company combined with an application for injunctions against the respondents. I have not been persuaded that the contempt proceedings against the respondents when commenced were "remedial or coercive in nature". In my opinion the proceedings were for criminal contempt and the appeal should be dismissed as incompetent.
179 The respondents did not object to the competency of the appeal although a holding Summons for leave to appeal was filed on 19 July 2006 and a notice of appeal with appointment on 24 October. Full appeal books have been printed and written submissions filed dealing with the merits as well as the competency of the appeal. As a result the costs have been unnecessarily increased.
180 I would therefore have been disposed to invite written submission on whether SCR Pt.51 r25(2) should be applied. As I am in a minority this question need not be pursued.
181 Since the majority hold that the appeal is competent I must consider other issues. I agree with much that Ipp JA has written on these issues but again regrettably I cannot agree that the implied undertaking was given by the servants and agents of the company other than its solicitors.
182 Ipp JA refers to the decision of the Full Court of the Supreme Court of Western Australian in Hamersley Iron Pty Ltd v Lovell (1998) 19 WAR 316 (Hamersley) where the Court held that Mr Lovell, an industrial advocate acting for the Union, was bound by the same implied undertaking as the Union.
183 The undertaking to keep discovered documents confidential and only use them for the proper purposes of the litigation which was originally express: Hopkinson v Lord Burghley (1867) LR 2 Ch Ap 447, in due time came to be implied: Alterskye v Scott [1948] 1 ALL ER 469, 470; Riddick v Thames Board Mills [1977] 1 QB 881 CA, 896; Esso Australia Resources Ltd v Plowman (1995) 183 CLR 10, 32. It is sometimes expressed as an obligation to the Court and the other litigant, arising by operation of law, which suggests that it has outgrown the limitations attaching to contempt proceedings for the enforcement of undertakings to the Court.
184 The implied undertaking or obligation extends to the solicitors acting for the litigant and this was treated as settled law in Harman v The Home Office [1983] 1 AC 280 (Harman). Lord Diplock said (at 304) that orders for discovery and inspection were "made upon the implied undertaking given by the solicitor personally to the Court (of which he is an officer)". Lord Keith (at 309) referred to the implied undertaking to the Court given by "a party's legal advisor" and (at 312, 313) Lord Scarman and Lord Simon of Glaisdale said that the law imposed the obligation "by implying an undertaking by the party … and his solicitor". Only Lord Roskill in a dictum referred (at 320) to "the implied undertaking of those in whose favour discovery is made … I, of course, include in that expression the solicitors and other agents of those parties."
185 Ipp JA collects (paras [91]-[102]) authorities said to support the proposition that the implied undertaking of the company was also given by the respondents as its servants or agents. This must mean that the undertaking was imposed on them personally by operation of law when the company, as a litigant party, came under that obligation. The undertaking as Lord Keith said in Harman (above at 308) "is … independent of any obligation … under the general law relating to confidentiality".
186 In my judgment the decision in Distillers Co. (Biochemicals) Ltd v Times Newspapers Ltd [1975] QB 613 (Distillers) where the plaintiff obtained an injunction to restrain a third party, which knew it had received discovered documents, from publishing confidential information in them, was not based on the Court's power to restrain a contempt of court. It was based on the power of a Court of Equity to restrain misuse of confidential information obtained from a person bound by an obligation of confidence to the plaintiff (at 619-620).
187 In my respectful opinion the cases other than Hamersley referred to by Ipp JA do not support the existence of an implied undertaking which extends beyond the litigant party and his solicitor. In Pacific Basin Exploration Pty Ltd v XLX (NL) (1984) 2 IPR 489 the Managing Director was found to have been in contempt of court. He had been present when the undertaking was given and his actions caused the Company to breach its undertaking. He was personally liable for contempt of court on the principles applied in Seaward v Paterson.
188 In Watkins v AJ Wright (Electrical) Ltd [1996] 3 ALL ER 31, 43 Blackburne J applied Lord Roskill's dictum in Harman and held that the implied undertaking was not confined to the solicitor on the record but extended to solicitors, such as the Scottish solicitor in that case, who "take upon themselves the day to day conduct of the litigation."
189 In my opinion the passage quoted from the judgment of Staughton LJ in Mahon v Rahn (No 1) [1998] QB 424, 454 does not support an extension of the implied undertaking to the respondents. His reference to the liability of a person who knowingly aids a contempt or does acts which are inconsistent with the undertaking is to the principles in Seaward v Paterson. His reference to Distillers was inappropriate because Talbot J. did not find that the Times was guilty of contempt of court, or impose sanctions. Talbot J did not rely on the principles in Seaward v Paterson which was not mentioned. The statement of Staughton LJ dealing with the position in civil proceedings was dicta, as the case concerned the effect of compulsory disclosure in criminal proceedings, and on this question it was overruled in Taylor v Serious Fraud Office [1999] 2 AC 177.
190 The passage quoted from the judgment of Laddie J. in Bourns Inc. v Raychem Corpn [1999] 1 All ER 908, 915-6 is also not relevant. He. said that it would be a contempt of court for a shorthand writer or court usher to disclose discovered documents to a stranger. So it would, but on the principles in Seaward v Paterson, not because those officers would be bound personally by the undertakings given by the litigants. As officers of the Court they would also be liable in contempt if their breaches of duty interfered with the course of justice: Borrie & Lowe op cit p450; Mudginberri at 107-8.
191 The statement by Ryan J. in Spalla v St George Motor Finance Ltd (2004) 209 ALR 703, 717 that the implied "undertaking must bind the litigant … and his or her privies" is a dictum which wasn't necessary for his decision. The liquidator of the Company formerly controlled by the accused was not their privy so as to be bound by their implied undertakings in the criminal proceedings. He did not claim through or under them for the purposes of the liquidation. However he would be bound by an obligation of confidence attaching to documents he obtained from the accused which he knew had been produced by the prosecution. He was amenable to equitable restraint as in Distillers, and liable in contempt if he caused the undertakings of the accused to be thwarted.
192 The decision in Hamersley that Lovell, the industrial advocate, was personally bound by an implied undertaking may be a justifiable extension of the implied undertaking which binds the solicitor on the record, and his liability may be supported on the principles in Seaward v Paterson but in my judgment the case does not justify a further extension of the undertaking to other servants and agents of a litigant.
193 An injunction which restrains the defendant by himself, his servants and agents from committing the prohibited acts is not an order against those servants and agents. Its operation was explained by Lord Uthwatt in Marengo v Daily Sketch and Sunday Graphic Ltd [1948] 1 All E.R. 406, 407:
"The reference to servants … and agents … has not the further result that those persons are enjoined, for, as Lord Eldon LC pointed out in Iveson v Harris (1802) 7 Ves. 251, 256 it was not competent to the Court:
'to hold a man bound by an injunction, who was not a party in the cause for the purpose of the cause'
The reference to servants … and agents in the common form is nothing other than a warning against wrongdoing to those persons who may by reason of their situation be thought easily to fall into the error of implicating themselves in a breach of the injunction by the defendant. There its operation, in my opinion, ends. If they knowingly assist the defendant in a breach by him of the injunction, they may be committed for contempt of court, not because they have broken the injunction - they have not done so - but because they have so conducted themselves as to obstruct the course of justice in assisting a breach and tried to set process of the court at naught. In that respect they stand in no different position from a complete stranger who knowingly sets out to assist the defendant in committing a breach."
194 If an injunction which expressly refers to the servants and agents of the defendant does not bind those servants and agents personally I fail to see how an implied undertaking can have a wider operation.
195 The respondent Peter Hearne was the managing director of the company when the proceedings were commenced and at all material times remained a director. Metro on George Pty Ltd held 34 percent of the shares in the company and Mr Hearne was a director of this company and held one of its two issued shares.
196 The respondent David Tierney had no official position with the company but was the Development Manager and strategic advisor to Multiplex Developments Australia Pty Ltd. The second defendant in the principal proceedings was Metro Edgley Pty Ltd which held 50 percent of the shares in the company. The ultimate holding company for Multiplex Developments Australia Pty Ltd and Metro Edgeley Pty Ltd was Multiplex Limited.
197 As Gzell J said, it could be inferred on the criminal onus that Mr Tierney was involved in the day to day operations of Luna Park, and as such a de facto senior executive of the company.
198 Mr Hearne as a director of the company was its servant or agent, as was Mr Tierney and if by operation of law they gave implied undertakings to the Court they were in breach.
199 Since in my judgment the law does not impose an implied personal undertaking on servants and agents of a corporate litigant the first charge of contempt against both respondents, based on an implied personal undertaking given by them to the Court, was not established. A second charge of contempt against both respondents was also dismissed but there has been no appeal from this dismissal.
200 It is not necessary to consider whether any implied personal undertaking to the Court given by the servants and agents of a corporate litigant extends to persons who are only its servants or agents de facto.
201 One or both of the respondents may have been liable for contempt on the principles in Seaward v Paterson but the charges against them were not framed on that basis.
202 Other English cases dealing with the liability of directors and officers for contempts by the company are not relevant. They are based on RSC 1962 Order 45 r.5 which replaced RSC 1883 Order 42 r.31: A-G for Tuvalu -v- Philatelic Distribution Corporation Ltd [1990] 1 WLR 926 CA, 937. Rule 5 provided:
"(1) [Where -
… (b) a person disobeys a judgment or order requiring him to abstain from doing an act, then, subject to the provisions of these rules, the judgment or order may be enforced by one or more of the following means, that is to say -
… (ii) where that person is a body corporate, with the leave of the Court, a writ of sequestration against the property of any director or other officer of the body;