Australian Competition and Consumer Commission v ACN 117 372 915 Pty Ltd

Federal Court of Australia|2016-12-01|Before: Moshinsky J

The sixth and seventh respondents (together, NRM) pay: (a) a fine in the sum of $50,000 in respect of the breaches of paragraph 9(c)(i) of the orders of the Court made 22 April 2015 (April 2015 orders) described in the first declaration made on 17 December 2015; (b) a fine in the sum of $200,000 in respect of the breaches of paragraph 9(c)(i) of the April 2015 orders described in the second declaration made on 17 December 2015; (c) a fine in the sum of $100,000 in respect of the breaches of paragraph 9(c)(i) of the April 2015 orders described in the third declaration made on 17 December 2015.
The fines payable by NRM pursuant to order 1 are to be paid into the Consolidated Revenue Fund within 14 days.
NRM pay the applicant's costs of and incidental to the interlocutory application dated 20 August 2015 on an indemnity basis.
If any party wishes to be heard on the form of orders 1 to 3 of these orders, the party may give notice in writing to the Court and the other parties within two business days. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Introduction 1 On 17 December 2015, I gave judgment on liability in respect of an interlocutory application brought by the applicant (the ACCC) for declarations that the sixth and seventh respondents (together, NRM) had breached orders made by North J on 22 April 2015 (the April 2015 orders) and were guilty of contempt: Australian Competition and Consumer Commission v ACN 117 372 915 Pty Limited (in liq) (formerly Advanced Medical Institute Pty Limited) [2015] FCA 1441 (the Reasons). These reasons should be read together with the Reasons. 2 As noted in the Reasons at [94], I concluded that NRM had breached paragraph 9(c)(i) of the April 2015 orders and was guilty of contempt of court by: (a) causing to be broadcast the radio advertisements identified in items 1 to 6 in Annexure "A" to the Reasons; (b) publishing or causing to be published the statements on its website set out in items 7, 8, 10, 11, 12, 14, 15, 17 and 18 in Annexure "A"; and (c) causing to be broadcast, from 25 April 2015, the television advertisement identified in item 20 in Annexure "A". 3 I made declarations that NRM was guilty of contempt of court in respect of the three categories of conduct described above, and ordered that the interlocutory application be listed for further hearing, on a date to be fixed, in relation to any fine to be imposed and costs. At the request of NRM, the matter was not set down for further hearing at that stage, as an appeal it had instituted against the judgment of April 2015 was pending. Nevertheless, orders were made for the filing and service of further evidence, and submissions, in relation to any fine to be imposed, and costs, in respect of the contempt application. 4 On 21 July 2016, the Full Court of this Court dismissed NRM's appeal: NRM Corporation Pty Ltd v Australia Competition and Consumer Commission [2016] FCAFC 98. 5 On 28 November 2016, a hearing took place before me in relation to any fine to be imposed, and costs, in respect of the contempt application. The ACCC submitted that a substantial fine should be imposed. In response to a question from me, it submitted that a fine in the order of $1,000,000 was appropriate. NRM accepted that a fine should be imposed, but submitted that a fine in the range, $10,000 to $40,000 was appropriate. In relation to costs, the ACCC sought an order that it be paid its costs of and incidental to the interlocutory application on an indemnity basis. On the other hand, NRM submitted that each party should bear its own costs. 6 For the reasons that follow, I have concluded that fines should be imposed on NRM as follows: (a) $50,000 for causing to be broadcast the radio advertisements; (b) $200,000 for publishing or causing to be published the statements on its website; and (c) $100,000 for causing to be broadcast, from 25 April 2015, the television advertisement. 7 In relation to costs, it is appropriate in my view that NRM pay the ACCC's costs of and incidental to the interlocutory application on an indemnity basis.

The evidence 8 At the hearing in relation to any fine to be imposed and costs, the ACCC relied on the following affidavits: (a) an affidavit of Daniel Marquet (a solicitor) dated 30 July 2015; (b) affidavits of Gerard O'Shaughnessy (an Assistant Director in the ACCC's Enforcement Division) dated 26 February 2016 and 5 April 2016; and (c) an affidavit of Hannah Nichols (a solicitor) dated 26 February 2016. 9 NRM relied on the following affidavits: (a) an affidavit of Lachlan Macinnis (a solicitor) dated 16 November 2015; (b) an affidavit of Dilip Shrestha (the Chief Financial Officer of NRM) dated 31 March 2016. 10 None of the deponents was cross-examined. 11 In addition to the affidavits referred to above, both sides were content for me to refer to the affidavits filed in connection with the hearing in relation to liability for contempt.

Background facts 12 On 22 April 2015, following the trial of the proceeding, North J made the April 2015 orders. These orders included, as paragraph 9(c), an injunction in the following terms: Each of the sixth and seventh respondents be permanently restrained, whether by themselves, their servants or agents or otherwise, in trade or commerce, from: … (c) making any statement or representation to any patient or prospective patient as to: (i) the efficacy of NRM treatments; (ii) the efficacy of any medications or medical services offered by parties other than the sixth and seventh respondents; or (iii) the patient's need for the NRM treatments and any adverse consequences that might result if the patient: (A) does not acquire the NRM treatments, or (B) does not receive NRM treatments for male sexual dysfunction. except if that statement is made directly to a patient or potential patient by a duly qualified medical practitioner during a consultation either in person or by video-link. 13 On 24 April 2015, Corrs Chambers Westgarth (Corrs), the solicitors for the ACCC, wrote to the solicitors then acting for NRM. The letter referred to the injunctions in paragraphs 9 and 10 of the April 2015 orders, noting that they took effect immediately on the making of the orders. The letter stated, among other things, that the ACCC had reviewed the current AMI website (which was operated by NRM) and "is concerned that statements remain on the site relating to the efficacy of NRM treatments particularly oral strips". Examples of such statements were provided. It was stated: These statements and any similar statements breach paragraph 9(c) of the Order and must be removed immediately. Please confirm by return that this has been completed. Please also confirm that a complete review of NRM's marketing and advertising material has been undertaken to ensure compliance with paragraph 9(c) of the Order. 14 On 26 April 2015, StevensVuaran Lawyers (StevensVuaran), who had commenced acting for NRM, responded to Corrs' letter dated 24 April 2015. StevensVuaran stated that they were in the process of taking instructions on an urgent basis in relation to Corrs' letter. After noting that the orders of North J contemplated that application could be made to vary the orders in relation to the issues raised in paragraphs [975], [988], [989] and [993] of the judgment, the letter stated: It seems to us that before our clients can properly understand what is required to be done to comply with the orders of North J (and thus, to provide us with instructions to respond to your letter under reply), it is necessary for those orders to be finalised and made certain. This requires the ACCC to make its position in relation to the orders clear. 15 On 27 April 2015, Corrs wrote to StevensVuaran. Among other things, the letter reiterated the point made in Corrs' earlier letter that the injunctions made by North J took effect immediately on the making of the orders on 22 April 2015. The letter stated that NRM should be able to provide the ACCC with details of the steps being taken to comply with the injunctions that had been made, "including responding to the ACCC's concerns about statements made on [NRM's] website regarding the efficacy of NRM's treatments as identified in our letter". 16 On 29 April 2015, StevensVuaran wrote to Corrs. The letter indicated that NRM would be filing an appeal from the judgment of North J and seeking a stay pending appeal. The letter stated that NRM understood that (subject to the stay application) it was required to comply with the April 2015 orders. The letter set out, in some detail, the basis upon which a stay would be sought. In relation to paragraph 9(c)(i) of the April 2015 orders the letter stated: Our clients also seek a stay of order 9(c)(i) because of the potential enormous breadth of the order and the very serious risk for inadvertent breach of the order. The concept of "efficacy" is an enormously [broad] and nebulous concept (as indeed, is demonstrated by the fact that you have referred, in your letter of 24 April 2015, to particular statements on the website as being in potential breach of order 9(c)(i)). It seems to us that there is almost nothing which can be said in relation to our client's products which could not potentially be characterised as being a reference to their "efficacy". If our clients cannot communicate with members of the public via the medium of advertising, or [through] its consultants, or in any other way other than personal consultation with a doctor, that will cripple our client's business. The ACCC is aware from the evidence given at the trial of the need for ongoing advertising to drive our client's business. 17 As set out in Annexure "A" to the Reasons, the statements on the website which were found to be in breach of the April 2015 orders were published as follows: (a) The statements set out in items 7 and 8 were published from 28 April 2015 to 23 July 2015. (b) The statements set out in items 10, 11 and 17 were published on 23 July 2015. (c) The statements set out in items 12 and 18 were published from 7 May 2015 to 23 July 2015. (d) The statements set out in items 14 and 15 were published from 13 May 2015 to 23 July 2015. 18 From 23 April 2015 to 30 July 2015, NRM caused to be broadcast on 2,421 occasions the television advertisement described in item 20 of Annexure "A" to the Reasons. 19 During May, June and July 2015, NRM caused to be broadcast radio advertisements containing the statements set out in items 1 to 6 of Annexure "A" to the Reasons. The details in Annexure "A" and the supporting evidence (ie, the affidavit of William Barrington dated 19 August 2015 at paragraphs 35(b) and 41) indicate that there were, in total, approximately 26 broadcasts. 20 During May 2015, there was correspondence between the parties' solicitors regarding various matters including the possible variation of certain paragraphs (other than 9(c)) of the April 2015 orders and compliance with the April 2015 orders. In a letter dated 5 May 2015, StevensVuaran wrote: Order 9(c) - Our client has removed from its website all references to the word "efficacy" (including, but not limited to, the references to which you had adverted in your earlier correspondence). 21 On 15 May 2015, Corrs wrote to StevensVuaran in response to that letter. Corrs stated that the ACCC had recently reviewed the website and identified instances of non-compliance with the April 2015 orders. The letter stated that, in the ACCC's view, NRM was in contempt of paragraph 9(c) of the April 2015 orders. Corrs set out, in Schedules 1 and 2 to the letter, a list of statements published on various pages of, and in video content available on, the website which the ACCC considered failed to comply with paragraph 9(c). The Schedules include many of the items in Annexure "A" to the Reasons which I found to constitute a contempt of court. In particular, items 7, 8, 10, 11, 12, 14, 15 and 17 set out in Annexure "A" were included in the Schedules to Corrs' letter. 22 In May 2015, NRM issued an application for a stay of the April 2015 orders pending appeal. In support of that application, NRM relied on an affidavit of Mr Shrestha dated 18 May 2015 (a copy of which was included in the material relied on by the ACCC for the purposes of the hearing on any fine to be imposed and costs). In relation to Mr Shrestha's affidavit, I note the following: (a) Mr Shrestha stated that, for the reasons set out in his affidavit, he was gravely concerned that if NRM was required to comply with the April 2015 orders in their then current form, it was likely that the business of NRM would not be able to continue. (b) Mr Shrestha provided, at page 1 of Exhibit DKS 1, a table he had prepared from the business records of NRM showing a summary of revenue and expenditure for the period 1 July 2014 to 31 March 2015. This showed, for the nine-month period, gross income of $15,220,584; net income (after refunds and cancellations) of $11,789,271; advertising expenses of $2,739,583; other expenses (which it is not necessary to detail for present purposes); and a net profit of $1,095,054. (c) Mr Shrestha stated that NRM engaged about 120 people as workers in its business, including both employees and contractors. (d) At paragraphs 41 to 45 of the affidavit, Mr Shrestha addressed the topic of website representations in relation to efficacy of products. He referred to Corrs' letter of 24 April 2015 and stated that subsequently he took steps to remove the word "efficacy" from certain pages of the website. He stated that to the best of his knowledge and belief the word "efficacy" was no longer used on the website. He referred to subsequent correspondence between the solicitors and then stated: Although all uses of the word "efficacy" have been removed from the website, I remain very concerned about the scope of the order which prevents any representation concerning efficacy in general being made by NRM and in particular, I am very concerned about what the order means and the possibility for inadvertent breach by NRM. Accordingly, I respectfully request the court to stay the operation of this order. (e) The affidavit stated that in the period 1 January 2015 to 28 April 2015, the website was accessed 138,826 times, and these sessions involved 96,602 unique users. 23 On 19 May 2015, StevensVuaran responded to Corrs' letter dated 15 May 2015. StevensVuaran referred to its previous letter of 29 April 2015 and NRM's stay application. The letter suggested that, in light of various matters there set out, "the issue about compliance with order 9(c) should await the determination of the stay application, so that it would be premature to deal with the issue by way of contempt proceedings". 24 On 28 May 2015, NRM's application for a stay of the April 2015 orders pending appeal was heard and determined by Middleton J. The stay application was largely unsuccessful: NRM Trading Pty Ltd v Australian Competition and Consumer Commission [2015] FCA 595. 25 On 19 June 2015, Corrs wrote to StevensVuaran. The letter stated that the ACCC remained of the view that NRM continued to publish statements or representations in breach of paragraph 9(c) on the website and also in radio and television advertisements for NRM's business. In relation to radio and television advertisements, the letter stated that: Further, the ACCC is also of the view that your clients have made representations or statements in contravention of order 9(c) in radio advertisements aired from 18 May 2015 until at least 15 June 2015 and in television advertisements aired from 23 April 2015 until at least 15 June 2015. 26 On 24 June 2015, StevensVuaran wrote to Corrs. The letter stated that NRM's "ability to comply with the orders has been hampered by the fact that the ACCC's view of the effect of the orders has not always been put in a consistent way". The letter requested "reasonable particulars" from the ACCC so that NRM "will be better able to consider the ACCC's position". 27 On 14 July 2015, Corrs wrote to StevensVuaran stating that the ACCC was considering potential contempt proceedings against NRM with respect to its ongoing non-compliance with the April 2015 orders. The letter provided a detailed description of the alleged breaches of the orders. 28 On 17 July 2015, Corrs sent a further letter to StevensVuaran reiterating that the ACCC considered that NRM would remain in breach of the April 2015 orders unless it reviewed the website. 29 On 20 August 2015, the ACCC issued the interlocutory application seeking orders that NRM was guilty of contempt. 30 On 17 December 2015, I gave judgment on liability in respect of the contempt application. 31 On 17 December 2015, Corrs wrote to StevensVuaran stating that NRM "must make immediate changes to [its] website to remove the impugned statements" and asking for confirmation when this step had been undertaken. 32 On 22 December 2015, Ms Nichols of Corrs telephoned Mr Macinnis of StevensVuaran as Corrs had not received a response to its letter. Ms Nichols asked Mr Macinnis to confirm when his clients would remove the statements from the website that had been found to breach paragraph 9(c) of the April 2015 orders. Mr Macinnis said that he understood from his clients that they were removing the statements from the website that day. 33 As at 22 February 2016, the following items set out in Annexure "A" to the Reasons remained on the AMI website: items 10, 11, 12, 14, 15, 17 and 18. All of these items had been the subject of a contempt finding. 34 As at 1 March 2016, items 10, 11, 12, 14, 15, 17 and 18 remained on the website. These items had been removed by 15 March 2016, but item 17 (the video) remained on the website as at that date. I was told by the solicitor for NRM that the video has been removed from the website. 35 NRM is still carrying on business. The evidence does not include details of its current financial position. 36 The affidavit material relied on by NRM does not include any explanation in relation to the broadcasts and publications which were found to have constituted breaches of paragraph 9(c) of the April 2015 orders. The affidavit of Mr Macinnis dated 16 November 2015 exhibits correspondence between the parties' solicitors. The affidavit of Mr Shrestha dated 31 March 2016 refers to the affidavit of Mr O'Shaughnessy dated 26 February 2016 (which provides evidence that the relevant statements continued to appear on the website after the 17 December 2015 judgment) and states that: "Due to an oversight, the statements and the video depicted in the screen captures were not removed from the website". Mr Shrestha states that this was brought to his attention "as a result of the matters referred to in the Affidavit" and that he had taken "urgent steps and arranged for all of the statements depicted in the screen captures to be removed from the Website". He stated: "It is regretted that this did not take place earlier". Apart from the reference to an oversight, the affidavit does not provide any explanation of how it is that items 10, 11, 12, 14, 15, 17 and 18 of Annexure "A" to the Reasons, which were found to have constituted breaches of paragraph 9(c) of the April 2015 orders, remained on the website for more than two months after the Reasons were handed down and the declarations were made on 17 December 2015.

Applicable principles 37 The particular form of contempt in issue here concerns disobedience of a court order. Conduct of this nature has traditionally been described as 'civil contempt'. In relation to breach of a court order, a finding of contempt can be made whether the breach was technical, wilful or contumacious: Construction, Forestry, Mining and Energy Union v Grocon Constructors (Victoria) Pty Ltd [2014] VSCA 261 at [138] per Ashley, Redlich and Weinberg JJA. In that case, their Honours said at [140]: The public interest requires that any disobedience more than casual, accidental or unintentional must at least be regarded as wilful [Steiner Products Ltd v W Steiner Ltd [1966] 1 WLR 986, 991; Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98, 111]. Thus, a deliberate act or omission which is in breach of an injunctive order or an undertaking, will ordinarily constitute wilful disobedience unless the alleged contemnor is able to show, by way of exculpation, that the default was casual, accidental or unintentional [Anderson v Hassett [2007] NSWSC 1310, [6]; Primelife Corporation Ltd v Newpark Pty Ltd [2003] VSC 106 (Nettle J)]. 38 A number of cases have referred to the difference between a wilful act and one that is contumacious. The latter has generally been regarded as involving a specific intention to disobey a court order, thereby evidencing "a conscious defiance of the court's authority": Mosman Municipal Council v Kelly (No 3) (2009) 167 LGERA 91; [2009] NSWLEC 92 at [72] per Biscoe J. 39 In the present case, the only form of penalty sought is the imposition of a fine, and there is no issue as to the Court's power to impose a fine in the circumstances of the case. 40 In Australian Competition and Consumer Commission v World Netsafe Pty Ltd (2003) 133 FCR 279, Spender J (at [16]) identified the following considerations as relevant in determining the appropriate penalty: Considerations which are relevant in deciding what is the appropriate penalty include: (a) The relative seriousness of the contempt, which is determined by the extent to which the contemnor appreciated that a contempt was being committed: Australian Competition and Consumer Commission v Info4PC.com Pty Ltd (2002) 121 FCR 24 at [144]. (b) Whether the contemnor subjectively intended to disobey the order: Attorney-General v Times Newspapers Ltd [1992] 1 AC 191 at 218; Australian Competition and Consumer Commission v Hughes [2001] ATPR 41-807 at [20]; and [Info4PC.com]. (c) The importance of bringing home to the contemnor the seriousness of the contempt: Hughes at [24]; [Info4PC.com] at [139]. (d) Whether the contemnor has offered any explanation or apology for his conduct: Gallagher v Durack (1983) 152 CLR 238, per Gibbs CJ, Mason, Wilson and Brennan JJ at 245. (e) An acknowledgment by the contemnor that a contempt was committed may be a mitigating factor: [Australian Securities and Investments Commission v] Matthews [(1999) 32 ACSR 404] at [25] and [29]. 41 In Australian Competition and Consumer Commission v Michalik (2004) 52 ACSR 115; [2004] NSWSC 1259, Palmer J considered the principles applicable to determining the appropriate penalty at [29]: For present purposes the relevant factors to be considered may be summarised thus: (i) the seriousness of the contempt proved; (ii) whether the contemnor was aware of the consequences to himself of what he proposed to do; (iii) the actual or potential consequences of the contempt on the proceedings in which the contempt was committed; (iv) whether the contempt was committed in the context of a proceeding alleging crime or conduct seriously prejudicial to the public interest: see, for example, Von Doussa v Owens (No 3) (1982) 31 SASR 116; (v) the reason or motive for the contempt; (vi) whether the contemnor has received, or sought to receive, a benefit or gain from the contempt; (vii) whether there has been any expression of genuine contrition by the contemnor; (viii) the character and antecedents of the contemnor; (ix) what punishment is required to deter the contemnor and others of like mind from similar disobedience to the orders of the court; (x) what punishment is required to express the court's denunciation of the contempt. 42 The passages set out in the two preceding paragraphs were cited with approval by Flick J in Sydney Medical Service Co-operative Limited v Lakemba Medical Services Pty Ltd (No 2) [2016] FCA 1188 at [14]-[15]. As Flick J pointed out, neither passage sets out an exhaustive list of relevant considerations. 43 In Humane Society International Inc v Kyodo Senpaku Kaisha Ltd (2015) 238 FCR 209, Jagot J imposed a fine of $250,000 in respect of each of four instances of contempt. In that case, the respondent had not appeared and thus had not offered any expression of contrition for its breaches of the injunctions (at [42]). Her Honour said that both specific and general deterrence were relevant factors in the case (at [43]). I note that her Honour had regard (at [34]) to the penalties applicable under the Environment Protection and Biodiversity Conservation Act 1999 (Cth). That aspect is, of course, inapplicable in the present case.

Disposition 44 I consider the following facts and matters to be relevant in determining the appropriate fine to be imposed. 45 First, this is not a case of technical breach, that is, where the breach is casual, accidental or unintentional. NRM was aware of the orders and may be taken to have understood them, having been represented by lawyers at all relevant times. Subject to one qualification, there is no evidence to suggest that its breaches were casual, accidental or unintentional. The qualification is the statement in Mr Shrestha's affidavit dated 31 March 2016 that, "[d]ue to an oversight", the statements and the video were not removed from the Website. It is apparent from the reference in the affidavit to Mr Shaughnessy's affidavit dated 26 February 2016 that Mr Shrestha is referring to the period after I gave judgment on liability for contempt on 17 December 2015. No detail is provided as to how the oversight occurred. No response has been provided to the ACCC's evidence reflected in [32] above. In any event, Mr Shrestha's statement does not relate to the breaches of the April 2015 orders before 17 December 2015. It follows that, at least in the case of the breaches of the April 2015 orders before 17 December 2015, the breaches were not casual, accidental or unintentional. In these circumstances, they are to be treated as at least wilful. If it is necessary to be satisfied of this matter beyond reasonable doubt, I am so satisfied. 46 However, I do not think the evidence is sufficient to support a finding that the breaches of the April 2015 orders were contumacious, in the sense that NRM had a specific intention to disobey the April 2015 orders. There is simply a gap in the evidence as to what NRM's state of mind was in causing the advertisements to be broadcast and publishing the website statements. I do not think it is possible to infer from the facts described above that NRM had a specific intention to disobey the orders notwithstanding very unsatisfactory aspects of its conduct. These unsatisfactory aspects include the fact that the ACCC's solicitors put NRM (through its solicitors) on notice that its conduct was in breach of the April 2015 orders, providing specific details of the breaches. The letters from NRM's solicitors and the affidavit in support of the stay application indicate that NRM was well aware of the breadth of paragraph 9(c) of the orders. Yet it continued to publish most of the statements on the website and to broadcast the advertisements. Notwithstanding these matters, I do not think there is a sufficient basis to infer that NRM's actions were contumacious. 47 NRM submitted that wilfulness and contumacy need to be pleaded in the statement of charge. In the present case, neither wilfulness nor contumacy was pleaded in the Amended Statement of Charge, but contumacy and, by implication, wilfulness were alleged in the ACCC's outline of submissions dated 29 April 2016 (filed and served a significant time before the hearing on any fine to be imposed and costs). NRM relied on Vaysman v Deckers Outdoor Corporation Inc (2011) 276 ALR 596 at [14] and [177]. But I do not take that case as authority for the proposition that an allegation of wilfulness or contumacy must be pleaded in the statement of charge: see the discussion of that case in Construction, Forestry, Mining and Energy Union v Grocon Constructors (Victoria) Pty Ltd [2014] VSCA 261 at [257]-[259]. In the latter case, the Court of Appeal concluded that contumacy need not be pleaded in the statement of charge (see [299]-[301], [311], [350]). For the same reasons, wilfulness need not be pleaded in the statement of charge. 48 I do not accept the submission, implicitly if not explicitly put on behalf of NRM, that it was the responsibility of the ACCC to explain the meaning of the orders to NRM. It was NRM's responsibility to comply with the orders and to take advice on what they meant if NRM was unsure about what was required. It was not the responsibility of the ACCC to give advice to NRM as to what the orders meant. The fact that the April 2015 orders were substantially in the terms proposed by the ACCC, as the applicant to the proceeding, does not alter this position. The orders, once made, were the orders of the Court. 49 Secondly, the breaches of the April 2015 order were significant in terms of the number of breaches and the time period over which they occurred. In the case of the television advertisement, this was broadcast on 2,421 occasions in the period 23 April to 30 July 2015. I note that the contempt finding related to the period from 25 April 2015, and therefore the number needs to be reduced slightly. Nevertheless, it is a large number. In the case of the radio advertisements, although the number was not great, these were broadcast over a period from 5 May 2015 to 25 July 2015. In relation to the website statements, many of the relevant statements remained on the website until about 1 March 2016. The evidence referred to in 22 above (albeit for an earlier period of time) indicates that the website is accessed by a large number of people. 50 Thirdly, it is to be inferred that the contemnor was aware of the consequences to itself of the conduct in question. NRM was legally represented at all relevant times. It is to be inferred, in these circumstances, that it was aware of the consequences of breaching the orders. 51 Fourthly, it is to be inferred that NRM sought to receive a benefit or gain from the conduct in breach of the orders. The nature and content of the advertisements and statements supports the inference that NRM sought to receive a benefit or gain by attracting customers to its business. However, the evidence does not enable a conclusion to be reached as to whether NRM actually received a benefit or gain. The evidence filed by NRM in support of its application for a stay (described above) was to the effect that it would suffer a loss if the orders were not stayed and it was required to comply with them pending the appeal. But I do not think this expectation provides a sufficient basis to infer that NRM did in fact receive a benefit or gain from its breaches of the orders. Nevertheless, as indicated, I think it can be inferred that it sought to receive a benefit or gain by its conduct. For completeness, I note that there is no evidence as to the amount spent on the advertising which constituted a breach of the orders. However, the amount spent on advertising referred to in 22 above (albeit for an earlier period) suggests that it is likely to have been a significant amount of money. 52 Fifthly, NRM has not expressed contrition for its breaches of the April 2015 orders, other than the statement in Mr Shrestha's 31 March 2016 affidavit that it was regretted that the statements and video were not removed from the website earlier. It is apparent from the reference in that affidavit to Mr O'Shaughnessy's affidavit dated 26 February 2016 that Mr Shrestha's statement relates to the breaches after 17 December 2015 rather than to the earlier breaches. It was submitted on behalf of NRM that, given that the sixth and seventh respondents are corporations, it is not possible for them to express contrition and one must instead look at their behaviour, relying on ACE Insurance Ltd v Trifunovski (No 2) (2012) 215 IR 206; [2016] FCA 793 at [113]-[114] per Perram J; but cf Construction, Forestry, Mining and Energy Union v Pilbara Iron Co (Services) Pty Ltd (No 4) (2012) 225 IR 113; [2012] FCA 894 at [33]-[34] per Katzmann J. In any event, if one has regard to the behaviour of NRM, it does not indicate contrition. NRM continued to engage in the conduct after it was warned by the ACCC's solicitors that it was in breach of the orders. NRM has not provided any explanation of how the breaches of the orders came about. NRM's behaviour does not indicate contrition. 53 Sixthly, there is no evidence that NRM has previously been found guilty of contempt of court. This is a factor which counts in NRM's favour in considering the penalty. 54 No evidence has been filed by NRM to suggest that it is impecunious or in financial difficulty. It follows that these are not matters to be taken into account in the present case. 55 NRM relied on the decision in Energizer Australia Pty Ltd v Proctor & Gamble Australia Pty Ltd [2016] FCA 347, where Nicholas J imposed a fine of $40,000. It was submitted by NRM that the present facts were comparable. However, in my view, the circumstances are very different. In that case, the respondent accepted that it contravened an interlocutory injunction on multiple occasions between 19 April 2015 and 11 May 2015 when a television commercial was broadcast a total of 954 times over 23 consecutive days on free-to-air television channels in various capital cities including Sydney, Melbourne and Brisbane. It was also accepted by the respondent that it should pay the applicant's costs of the proceeding on an indemnity basis. The issue concerned whether the respondent should be required to pay a fine and, if so, in what amount. I note the following matters: (a) Nicholas J was satisfied that the relevant authorisation was given by mistake and thus the respondent was unaware that the broadcasts had taken place (at [26]). In the present case, no explanation of the breaches of the April 2015 orders has been provided. (b) Nicholas J stated that the respondent had shown genuine contrition and remorse and had also taken timely and meaningful steps to ensure that a similar breach of the Court's order would not occur again (at [42]). In the present case, NRM has not expressed contrition or remorse (save for the statement referred to in [52] above). Nor has it outlined any steps that it has taken to ensure that it does not breach the orders again. Further, I note that Nicholas J stated that "[had] there been an element of intention or recklessness present, the fine imposed on the respondent would have had to be much more substantial" (at [42]). 56 In my view, when regard is had to the matters referred to above, and the need to deter the contemnor and others of like mind from similar disobedience of the orders of the Court, and to express the Court's denunciation of the contempt, the following fines are appropriate. I will consider each group of breaches separately. (a) I consider the breaches relating to the publication of statements on the website to be the most serious, given the number of breaches; the fact that NRM was specifically put on notice about many of these breaches by the ACCC's solicitors; and the period of time over which these breaches occurred. In relation to this group of breaches, I consider a fine of $200,000 to be appropriate. (b) I consider the breaches concerning the television advertisement to be serious. This advertisement was broadcast a large number of times (slightly less than 2,421 times in the period from 25 April 2015 to 30 July 2015). NRM was on notice from the ACCC's solicitors' letter dated 24 April 2015 that it should conduct a complete review of its marketing and advertising material to ensure compliance with paragraph 9(c) of the April 2015 orders. NRM was warned, in the letter from the ACCC's solicitors dated 19 June 2015, that its radio and television advertisements breached the orders. Yet the broadcasts continued until 30 July 2015. In relation to this group of breaches, I consider a fine of $100,000 to be appropriate. (c) I consider the breaches concerning the radio advertisements to be serious. The number of occasions on which these advertisements were broadcast was lower (approximately 26 occasions), but otherwise many of the same points discussed in (b) above apply. In relation to this group, I consider a fine of $50,000 to be appropriate. 57 The fines set out above produce a total figure of $350,000. Looking at the contravening conduct as a whole, I do not consider this total figure to be in any way excessive, having regard to the serious nature of the breaches. Accordingly, I will order NRM to pay fines in the amounts set out above.

Costs 58 The ACCC sought its costs of the interlocutory application on an indemnity basis. An order for indemnity costs is not uncommon in respect of an application for contempt of court. On the other hand, NRM submitted that each side should bear its own costs (alternatively, that there should be a discount on the costs otherwise payable to the ACCC), on the basis that some of the alleged breaches of paragraph 9(c)(i) and all of the alleged breaches of paragraph 9(c)(iii) of the April 2015 orders had not been made out. 59 In my view, the ACCC was substantially successful in the contempt application and is entitled to its costs on the basis that costs follow the event. The matters in respect of which NRM succeeded occupied only a minimal amount of time. The substance of the matter is that the ACCC succeeded in its application. 60 Further, it is appropriate for the ACCC to be paid its costs on an indemnity basis. NRM's breaches of the April 2015 orders were serious. It was put on notice by the ACCC that it was in breach of the orders but continued to breach the orders. It has offered no explanation. The ACCC should not be 'out of pocket' for having brought the application. Accordingly, I will make an order that NRM pay the ACCC's costs of and incidental to the interlocutory application on an indemnity basis. I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Moshinsky.

SCHEDULE OF PARTIES VID 1113 of 2010 Respondents Fourth Respondent: BRIAN LONERGAN Fifth Respondent: JAMES VANDELEUR Sixth Respondent: NRM CORPORATION PTY LTD (ACN 151 468 601) Seventh Respondent: NRM TRADING PTY LTD (ACN 151 469 493)

At a glance

Court

Decision date

Before

Source

Judgment (8 paragraphs)

Parties

Legislation Cited (1)

Cases Cited (22)

Cited By (3)