Australian Competition and Consumer Commission v Hughes [2001] FCA 38 | Case summary

Federal Court of Australia|2001-02-02|Before: Tamberlin J

REASONS FOR JUDGMENT 1 The applicant ("the Commission") seeks an order that the respondent ("Hughes") is guilty of contempt of court because he has breached an order made by the Court on 9 November 2000 by failing to cause a notice to be posted, within ten days of that date, on an internet site ("the site") to the effect that oral contraceptives will not be sold or supplied to anyone in Australia. 2 This order was one of several orders made by me on 9 November 2000 including orders restraining Hughes from making misleading and deceptive representations and requiring him to cause to be published an advertisement correcting a false and misleading or deceptive representation, previously published on the site. 3 The order in question is in these terms: "7. Until the further order of the Court: (a) the Respondent, by himself or his agents, cause a notice to be posted on the site to the effect that oral contraceptives will not be sold or supplied to anyone in Australia, such notice to be in font size 12 in Times New Roman and posted within ten days from the date of this order and to remain on the site." 4 The order noted that the Respondent referred to in the orders was David Zero Population Growth Hughes who had appeared before the Court on 9 November 2000. This note was made because Hughes has acted under a number of pseudonyms. The description is used because Hughes holds strong and definite views as to the over population of the planet and the necessity to avoid the problems which arise from excess population pressure. 5 Included in the orders was a note to Hughes that if he disobeyed the orders he could be liable to a fine and/or imprisonment and/or sequestration of his property. Hughes does not contend that he was unaware of the orders made on 9 November or of the caution. 6 On 27 November 2000 Hughes was served on behalf of the Commission with a copy of the Notice of Motion seeking an order that he is guilty of contempt together with the Statement of Charge and an affidavit in support. The service was effected personally. The Statement of Charge reads: "The Respondent is guilty of contempt of the Court in that in breach of orders made by his Honour, Justice Tamberlin on 9 November 2000 he has failed to cause a notice to be posted within ten (10) days from 9 November 2000 on the internet site located and associated with the domain name ("the site") to the effect that oral contraceptives will not be sold or supplied to anyone in Australia, which notice was to remain on the site." 7 Evidence has been filed by the Commission that periodic inspections of the site, during the period 10 November 2000 to 14 December inclusive, disclosed that the required amendment had not been made. However, the printouts from the site in evidence indicate that a number of different amendments have been made to it since 10 November 2000. These are annexed to affidavits filed by the Commission and it is not necessary to itemise them here. It is clear that there has been no compliance with the order. 8 Some of the contraceptive products advertised on the site of Crowded Planet include substances which in the public interest can only be supplied upon the written prescription of a medical practitioner or other authorised person. These are substances within Schedule 4 to the Poisons and Therapeutic Goods Act 1966 ("the Act") known as the "Poisons List": ss 8(2) & 17A. A letter in evidence from the Therapeutic Goods Administration dated 12 January 2000 states that in the opinion of that Administration the site is illegally promoting and supplying Schedule 4 oral contraceptives to the public and that upon being informed of this allegation the respondent failed to make any adequate response. 9 In the course of a television interview on Channel Nine on 24 October 2000 the respondent acknowledged that he had been illegally supplying through the site contraceptive pills and the "morning after" pill to anyone who ordered it on the internet without prescription. He further acknowledged that he did not have any medical qualification to make any decision on a woman's medical condition whether it came from blood pressure, allergies or other complications. In addition, on being confronted with an assertion that he knew that it was illegal to sell any Schedule 4 drug without a prescription, he responded: "Well that's just the law in Australia." 10 Mr Ian Anderson ("Anderson") of Gladesville Hospital, Gladesville, is a pharmaceutical adviser employed by the New South Wales Department of Health. His affidavit evidence was that his duties are to advise on pharmaceutical matters and investigate complaints relating to the Poisons and Therapeutic Goods Act 1966 (NSW) ("the Act"). Anderson has a Bachelor of Pharmacy from Sydney University and a Master of Computing from Macquarie University. He said that on 10 November 2000, in company with two other Pharmaceutical Advisers, he visited and searched the Crowded Planet premises located at 157 Crown Street, Wollongong because the Department of Health had received information alleging certain items were being sold from the premises contrary to the provisions of the Act. His function on that occasion was to download or make copies of relevant files from the Crowded Planet computer. A number of therapeutic goods, in the nature of packets of contraceptive pills, were collected and seized in exercise of powers conferred by s 43 of the Act. Anderson inspected the directories of a number of files on a computer at the premises and found they contained a number of names and addresses. He was unable to download files from the computer to a disk because the files were too large. Importantly, he said that the computer did not appear to be "corrupted" when he left the Crowded Planet premises. 11 In response to the application Hughes filed a Statement in the form of an Affidavit which refers to the visit of the three officers of the New South Wales Health Department. He says that they took away all birth control pills and boxes of emergency contraception for refugee camps, photocopied customer files, and made a copy of the desktop computer hard drive onto a laptop computer. He says that the hard drive on the Crowded Planet computer may have been corrupted by them. Hughes says that from 11 November onwards he attempted on at least three occasions to obey the order of 9 November but was unable to do so for technical reasons related to Microsoft software used by Crowded Planet. He says that on 18 November he asked a person aiding him with his site, "Rodger", to assist him to comply as Hughes does not have computer expertise. He says that he was informed that Rodger could not comply with the order using the Microsoft software. Hughes asserts that he will, if possible, comply with the order but that it seems pointless and a waste of time because Crowded Planet's business, under which he operates, will cease its non-profit operations in Australia and possibly relocate to New Zealand. 12 Hughes was cross-examined by Counsel for the Commission. He conceded that, since 10 November 2000, a number of changes had been made to the site at his direction. Hughes expanded on his statement that it was technically impossible to comply with the order and says that font size 20 point is not available on the Microsoft software. I note here that the order requires the notice to be written in font size 12 point, not 20 point. Hughes said it was his mis-understanding that the order required font size 20. He asserted that the site, posted in California, could not be altered without "hacking" into it, and that this was illegal. 13 Apart from assertion as to suggested technical difficulties in implementing the order Hughes did not call any evidence, either from his computer assistant Rodger whom he was very reluctant to name in order to protect him, or from any other person competent or with expertise to support his assertions. 14 The Commission submits that the amendments to the site after 10 November 2000 show a capacity to amend the site to include new material and that despite these alterations Hughes has not carried through the order by posting the notice. The thrust of the "explanations" put forward by Hughes is that he was unable to comply exactly with the orders of the Court and that he says the Crowded Planet computer may have been corrupted by the "computer incompetence" of the New South Wales Health Department officer who attempted to access the files on it on 10 November. I do not accept this assertion and prefer the evidence of Anderson on this aspect. The "explanation" of Hughes does not dispel the inference to be drawn from the fact that other alterations were carried out to the site. As to the assertion that the site could not be amended without illegally "hacking" into the site by Rodger or some other expert no evidence was called to support it. It was simply an assertion.

Relevant principles 15 Ultimately, in the case of mandatory or prohibitory orders made by it, the sanction which the Court has in order to enforce its decisions is the power to punish for contempt. This is the way in which the Court preserves respect for its role and the rule of law. Without the enforcement of court orders the whole process of adjudication becomes a hollow exercise. If a losing party can defy the orders of the Court then such disobedience renders futile, in the perception of the community, the remedy secured by the successful party. Orders are not made simply to suggest or advise persons that they ought to keep to the law as proclaimed but to ensure that the law is carried out as determined by the decision pursuant to which the order is made. Defiance of court orders diminishes the authority of courts and removes the incentive of parties, if such conduct is left unpunished, to comply with the requirements of the courts. 16 In Witham v Holloway (1995) 183 CLR 525, the High Court decided that proceedings for contempt, whether for civil or criminal contempt, must be seen as criminal in nature for the purposes of fixing the standard of proof. Therefore charges of civil contempt must be proved beyond reasonable doubt. In that case, Brennan, Deane, Toohey and Gaudron JJ discussed the historical distinction between civil and criminal contempt. Their Honours pointed out (at 533) that: "All orders, whether they be Mareva injunctions, injunctions relating to the subject matter of the suit, or, simply procedural orders, are made in the interests of justice. Non-compliance necessarily constitutes an interference with the administration of justice even if the position can be remedied as between the parties … … proceedings for breach of an order or undertaking have the effect of vindicating judicial authority as well as a remedial or coercive effect. Indeed, if the person in breach refuses to remedy the position … their only effect will be the vindication of judicial authority. Given that purpose or object cannot be readily disentangled from effect and given, also, that a penal or disciplinary jurisdiction may be called into play in proceedings alleging breach of an order or undertaking, it is necessary to acknowledge … that punitive and remedial objects are … 'inextricably inter-mixed.' Moreover and, perhaps, of more importance, nothing is achieved by describing some proceedings as 'punitive' and others 'remedial or coercive'. Punishment is punishment, whether it is imposed in vindication or for remedial or coercive purposes. And there can be no doubt that imprisonment and the imposition of fines, the usual sanctions for contempt, constitute punishment. And the same is true of a sequestration order made in consequence of a company's failure to comply with an order or undertaking." 17 The general rule is that it is the duty of those who are subject to an order of a court to strictly observe the terms of the order: see Borrie and Lowe The Law of Contempt 3rd ed 1996, at 559-560; Arlidge, Eady & Smith On Contempt, 2nd ed 1999 at 189. It is not necessary for a court to prescribe the manner in which the required result is to be achieved; it is sufficient if the court clearly specifies that a respondent is to carry out a particular course of conduct: see Concrete Constructions Pty Ltd v Plumbers and Gasfitters Employees Union (No 2) (1987) 15 FCR 64 at 72-73 per Wilcox J. The order must specify with certainty the result to be achieved but it is not for the applicant to suggest, or for the court to prescribe, a particular method of compliance. In this case it is the duty of Hughes to find out and implement proper means of obeying the order. 18 It is important to bear in mind that the order must be clear and specific and that a court should not order action to be taken that is impossible. 19 In Australian Building Construction Employees' and Builders Labourers' Federation v Commonwealth of Australia (1986) 161 CLR 88 at 112-113, Gibbs CJ, Mason, Wilson and Deane JJ said: " …lying behind punishment for a contempt which involves wilful disobedience to a court order, is the very substantial purpose of disciplining the defendant and vindicating the authority of the court. In our view the reasons supporting the recent decisions are compelling and they should be accepted by the authority of this Court. It follows that a deliberate commission or omission which is in breach of an injunctive order or undertaking will constitute such wilful disobedience unless it be casual, accidental or unintentional." (Emphasis added) 20 It is not necessary to prove any subjective intent to deliberately disobey the order: see Stancomb v Trowbridge Urban District Council [1910] 2 Ch 190 at 194. However, such intent will be important in determining what is an appropriate penalty: see Attorney-General v Times Newspapers Ltd [1992] 1 AC 191 at 217-218. An honest belief that a failure to act does not constitute a breach of an injunction is not a defence: see McNair Anderson Associates Pty Ltd v Hinch [1985] VR 309 at 313-314.

The present case 21 In this case the terms of the order are clear and unambiguous. Hughes was required to cause a notice to be placed on the site he did not do so. The terms of the order required that the entry be made in a certain type size, although the specific type size is not part of the Statement of Charge. In my view, that type size is not the essence of the contempt in the present case and its absence from the Statement of Charge is of no significance. I am satisfied that Hughes had proper notice of the terms of the order. He does not contend to the contrary. 22 I am also satisfied, beyond reasonable doubt, that the breach of the order alleged in the Statement of Charge has been made out. I am not persuaded that the explanations advanced by Hughes as to his inability to comply have any substance. The fact that he has been able to procure numerous alterations to the site calls for a satisfactory explanation as to why the alteration required by the order was not implemented. No such explanation was given. In addition, it is important to note that no approach was made to the Court by Hughes after the order was made on the basis that it was not possible to comply with the order either at all or within the specified period. 23 Furthermore, on the evidence I am satisfied that his failure to comply with the order cannot be described as "casual, accidental or unintentional". There has been a deliberate omission which reflects to a large extent an important lack of appreciation of the importance of strict compliance with orders of the Court. Although I accept that Hughes has generally acted on the basis of a firmly held belief as to the perceived evils of population growth, nevertheless he has clearly failed to attach the required degree of priority or importance to an order of this Court. 24 I am satisfied that Hughes is not expressly setting out to defy the Court but he is treating the orders of the Court with disdain as if they were merely suggestions which can be ignored. It is essential that the seriousness of his contempt is brought home to him and he must realise, no matter how worthy he sees his ideals, that his perceptions do not constitute a licence to ignore court orders or legislation directed to the protection of public health and the prohibition of deceptive conduct. 25 I do not accept the submission that Hughes is not responsible for the breach in view of his demonstrated abilities to bring about these changes to the web page which are in evidence. In any event it is his responsibility to ensure that the order is complied with.

penalty 26 In my view his failure to comply in the present case is serious. No mitigating circumstances have been established. No attempt has been made to obtain a variation of the order on the basis that it is not technically feasible or is not legally achievable. Nor has any satisfactory evidence been advanced, apart from mere assertion, as to any serious or sustained effort made by him to give effect to the order. No real attempt has been made to comply with the specific order in question. There can be no doubt that Hughes understood the nature and effect of the orders but he thought it more significant to make minor amendments, in some instances scurrilous ones, to the web page, rather than direct his attention to the important matter of publishing the notice. Underpinning the order in question is a substantial concern with respect to the public health of a significant portion of the Australian community. I am satisfied that some of the contraceptive products advertised on the site are not available in Australia without prescription and that sales through the site make them available without prescription. That this is known to Hughes as evidenced by the transcript of the Channel Nine interview with him on a "Current Affair" made on 24 October 2000. In that interview Hughes demonstrated a general lack of concern with the fact that the sales may be illegal. 27 One aspect of these proceedings gives me cause for concern. In its submissions on the contempt application the Commission refers to the "significant questions of public health" which are involved in this matter. The products have been available on the site over a considerable period to anyone who made application. Yet, notwithstanding that the Therapeutic Goods Administration says that it became aware in March 1999 that the site was illegally promoting Schedule 4 oral contraceptives, no proceedings were instituted until the end of August 2000, a delay of over sixteen months. I find this, to say the least, somewhat disconcerting. The documents in evidence do not disclose any satisfactory basis for such delay where a question of public health is concerned. 28 As Sackville J pointed out in Australian Securities and Investment Commission v Mathews (1999) 32 ACSR 404 at 411 the Court has a wide range of penalties open to it including fines, sequestration of property and imprisonment. There is also power in the Court to suspend, on conditions, any sentence of imprisonment that might be imposed in respect of contempt. In the present case I do not consider that the imposition of a fine is adequate. There are considerable doubts as to whether Hughes would be able to pay such a fine. Moreover, I do not consider that a fine would be sufficient to bring home to Hughes the seriousness of his contempt in the present matter. I consider that Hughes' conduct, having regard to his cavalier approach to the order, is sufficiently serious to warrant a term of imprisonment of two weeks. In view of the circumstance that Hughes has acted not for the purpose of making a profit but in the interests of advancing the public good as he sees it, I think it appropriate to suspend the term of imprisonment on condition that Hughes amends the site as required by the order within a period of thirty days from the date of this order. I trust that this indulgence will focus his attention on the necessity to act promptly. 29 I consider that costs should be awarded in favour of the Commission on a solicitor-client basis having regard to the conduct of Hughes outlined above.. 30 I find and declare that the respondent, David Zero Population Growth Hughes has committed a contempt of this Court by his conduct in disobeying the order of the Court referred to in the Statement of Charge. 31 I order that: (1) The respondent be imprisoned for a period of two weeks. (2) The warrant for the respondent's committal to prison for a period of two weeks be issued. (3) The warrant is to lie in the Registry for thirty days from today to the intent that it not be executed, provided that within that period the respondent posts on the internet site located at http://www.crowded.org the notice referred to in order 7(a) made on 9 November 2000. (4) The respondent is to pay the Commission's costs on a solicitor-client basis.

I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.

Solicitor for the Applicant: Australian Government Solicitor

Australian Competition and Consumer Commission v Hughes

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