Australian Competition & Consumer Commission v Globex Systems Pty Ltd

Federal Court of Australia|2005-05-10|Before: Lander J

THE PROCEEDINGS 1 The first respondent has pleaded guilty to three charges of contempt by breaching orders made by me on 10 January 2005. 2 I will refer to the charges in more detail a little later.

THE HISTORY UP UNTIL 10 january 2005 3 The second and third respondents are the first respondent's directors. The fourth and fifth respondents were employed by the first respondent until 1 January 2005. The first respondent commenced trading in 1997 and conducts the business of selling cleaning chemicals and office consumables which largely comprise printer cartridges. Sales of these products are made by telephone contact. Indeed, the telephone is the only form of marketing that the first respondent uses. 4 The first respondent has two sales teams; a New Accounts Sales Team; and a Re-sale Accounts Team. Each team has a team leader and five sales staff. The team leaders and the sales staff of the New Accounts Sales Team are all employed on a casual basis. Mr Warren Skry, the third respondent, said in an affidavit read by the first respondent: 'Most sales staff are back-packers or other persons looking for employment on a short-term basis. As such, Globex has a very high staff turnover of around 250 sales staff each year. It is not possible to estimate the average length of employment of a sales staff member. Some sales staff only do one shift. Others may stay for a few months.' 5 The Re-sale Accounts Team is, of course, responsible for selling products to existing customers. Unlike the members of the New Accounts Sales Team, the members of the Re-sale Accounts Team are all employed on a full-time basis. There are no casual employees on that team. 6 Until August 2004 the team leader was Sabrina Vaccaro but since that time the team has been supervised by Dimitra Bourel and the third respondent. 7 In 2004 the other members of the Re-sale Accounts Team were Tom Brown, Emma Gourlay, Clare Trobe, Elizabeth Weston and Paul Bennet. 8 Ms Trobe and Ms Gourlay, who are respectively the fourth and fifth respondents in the principal proceedings, ceased employment with Globex with effect from 1 January 2005. 9 On 17 December 2004 the Australian Competition and Consumer Commission (the ACCC) brought proceedings against Globex Systems Pty Ltd (the first respondent), its directors, Messrs David and Warren Skry (the second and third respondents), and two of its employees (the fourth and fifth respondents). 10 On the same day, the ACCC filed a notice of motion seeking interim injunctive relief against all respondents. The originating application and the notice of motion seeking injunctive relief show that the ACCC claimed that the first respondent had engaged in conduct in contravention of the Trade Practices Act 1974 (Cth) (the Trade Practices Act) and, in particular, contravention of s 52, s 53(b), s 53(bb) and s 64(1). 11 On 23 December 2004 the first respondent closed for the Christmas holidays. 12 On 24 December 2004 the parties agreed that the Court could make consent orders in the terms of orders made by me on 10 January 2005. The orders directed to the first respondent were in the following terms: '1. An injunction restraining Globex, for the period 18 January 2005 to the hearing of the Notice of Motion dated 17 December 2004, pending further or other order, whether by itself or by its officers, employees, agents or otherwise howsoever, in trade or commerce, from making representations to the effect that a person: 1.1 has ordered any goods supplied, to be supplied and promoted by Globex (Globex Goods); 1.2 has ordered a certain quantity of Globex Goods; 1.3 has entered into an agreement to purchase Globex Goods; 1.4 a person is required to take delivery, whether immediately or otherwise, of Globex Goods; 1.5 must take further delivery of Globex Goods to complete an agreement with Globex; where any of those representations are not correct. 2. An injunction restraining Globex, for the period 18 January 2005 to the hearing of the Notice of Motion dated 17 December 2004, pending further or other order, whether by itself or by its officers, employees, agents or otherwise howsoever, in trade or commerce, from asserting or representing a right to payment, including by: 2.1 making a demand for payment or asserting a present or prospective right to payment; 2.2 threatening to bring legal proceedings with a view to obtaining payment; 2.3 sending any invoice, statement, overdue notice or other document stating the amount of the payment with the view to obtaining payment; where Globex does not have reasonable cause to believe that there is a right to payment.' 13 It is to be noted that the parties, including the first respondent, agreed to these orders on 24 December 2004. The orders were made on 10 January 2005 but they were not to operate until 18 January 2005. The first respondent had nearly four weeks to put in place a regime to ensure compliance with the orders. 14 The other thing to be noted is that the orders merely require the first respondent to comply with the provisions of the Trade Practices Act by enjoining the first respondent from making misrepresentations in the course of conducting its business. Thus, the orders could not be said to be onerous.

THE FACTS CONSTITUTING THE CONTEMPT 15 In or about April 2004 the Australian Screen Directors' Association (ASDA) purchased two ink cartridges from the first respondent. They were delivered on 20 April 2004 and paid for on 17 May 2004. A further three ink cartridges were purchased from the first respondent in October 2004. 16 On 2 February 2005, some time between 10.30 am and 11.00 am, Jacqueline Head, the Administration Officer of ASDA received a telephone call from a person now known to be Tom Brown, an employee of the first respondent in the Re-sale Accounts Team. According to Ms Head, the following exchange took place: 'He said: Your order has been delayed because it is out of stock. Can we send it on at a later date? I said: We haven't ordered anything. He said: It's part of the discounted pack you ordered at 25% discount off the original price. I said: We haven't ordered anything. He said: It's the order you agreed to in April last year. I said: I only ordered two cartridges on a trial basis. He said: Yes, you took two cartridges on a trial basis and weren't you happy with them? I said: Yes. He said: If you weren't happy with them you could have sent them back, even if you had used them and we would have refunded your money.' 17 Ms Head did not reply and Mr Brown continued: 'He said: Well you didn't return them, did you? I said: No. He said: Well, you must have been happy with the product. I said: They were ok but we don't need any more, we still have the ones we received in October in stock, we haven't used them.' 18 Whilst Ms Head was talking with Mr Brown she noticed that the General Manager of ASDA, Helen Martin, was indicating to her not to purchase any further cartridges. The conversation continued: 'I said: Just cancel the order. He said: You can cancel it but you will have to pay us back the 25% discount we have already given you for the previous cartridges. I said: We're not paying that. He said: You'll have to pay that. I said: No, we're not going to pay that. He said: You'll have to or you just continue with the order. I said: We don't want to continue with the order (I said this even though I knew that we did not have an order. I just wanted to get off the phone).' 19 Ms Martin said to Ms Head that she wanted to speak to the person to whom Ms Head was then speaking. Ms Head transferred the telephone call to Ms Martin. 20 Ms Martin said that she then had the following conversation with Mr Brown: 'I said: Hello. It's Helen Martin here. I'm the general manager, how can I help you? He said: I'm ringing from Globex. We've got an order for you. I said: We have not placed an order with you and we're not going to place an order with you. He said: If you'd stop interrupting me I'll tell you what it is. Jackie has ordered a pack at a 25% discount. I said: We have not ordered any more cartridges. We are not placing an order with you. We don't have an agreement with you to buy any more. He said: She ordered a pack and there are still more in the pack. I said: Jackie would never do that. She doesn't have the authority to do so and we don't have the money. He said: Stop interrupting me. Is everyone as rude as you are? I said: Yes. We are all as rude. He said: I'm going to report you. Who is your boss? I said: There's no one to report to. I am the general manager. We have an executive director who deals with policy. I deal with the office accounts. We are not ordering any more. He said: Give me his name. I'll report you to him. I said: I'm sorry, he won't be interested and I'm not going to give you his name. He said: You are rude. I don't want to speak to you. I'm going to report you.' 21 Ms Martin then hung up. Immediately after she had done so, the phone rang again and she recognised the person at the other end of the line as Mr Brown. She said she had the further following conversation: 'I said: Hello. Australian Screen Directors Association. Helen Martin Speaking. He said: Don't hang up on me. I want the name of the person in charge.' 22 Ms Martin immediately hung up on Mr Brown. 23 The phone rang yet again and this time Ms Head answered it. Again, it was Mr Brown. According to Ms Head, the following further conversation took place: 'He said: Who is the person in charge? I said: Are you from Globex, were you just speaking to me? He said: Yes. He said: Who is in charge? I said: He is Richard Harris and he is the Executive Director. He does not deal with these trivial things. If you want to speak to someone you speak to me or you speak to Helen who is our General Manager. He said: I don't want to speak to Helen. I'd prefer to speak to you because I've had dealings with you before. You agreed to take the cartridges. I said: No, I didn't and we don't want to buy any more cartridges. He said: I'll call Richard tomorrow and speak to him and sort it out with him. You're rude and don't let me get a word in. I said: You can call tomorrow but you won't be speaking to Richard because he wont be dealing with you. He said: Have a nice day. I said: You have a nice day too.' 24 Ms Martin was offended by Mr Brown's behaviour and she did a Google search on the Internet in relation to the first respondent for the purpose of finding the appropriate officer of the first respondent to send a letter of complaint. Whilst conducting that search, she saw a media release by the ACCC which referred to legal proceedings against the first respondent. She telephoned the ACCC and reported the conversation with Mr Brown. 25 Ms Martin then wrote to the first respondent sending a copy of the letter to the ACCC. The letter was in the following terms: 'I am writing to let you know that we do not want, nor have we asked for, any further toner cartridges to be supplied to The Australian Screen Directors Association (ASDA) by Globex Systems. My assistant Jackie Head, had agreed to trial 2 Globex cartridges in April of last year after some high pressure phone salesmanship. She had not agreed to an ongoing relationship with Globex. When I saw an invoice from Globex for the second consignment, I spoke to Jackie and asked that she return the cartridges and request a refund as these cartridges were almost triple the cost of those from our original supplier. She was informed that they would not allow a refund. I requested that no more cartridges be ordered from Globex. Jackie received a call today from a sales representative from Globex who insisted that she takes further consignments of cartridges in spite of the fact that she had not ordered any. He insisted that she had agreed to more printer cartridges as part of a discounted deal originally offered. However Jackie had not agreed to more cartridges or to an ongoing relationship with Globex in the original conversation she had with the sales representative. No contract or arrangement had been signed or authorised by anyone in this office. Globex has sent neither price listings nor purchase orders to the Australian Screen Directors Association for any price comparisons or authorisations by anyone in this office. The invoices certainly do not indicate that there is any discounted price on the purchased items. The salesperson who contacted this office attempted to bully us into accepting more cartridges which we have refused. I consider that Globex has made false representations to me that my assistant had agreed to acquire the cartridges, have engaged in misleading and deceptive conduct and have illegally asserted a right to payment for unsolicited goods. I have sent a copy of this letter to the ACCC. Contrary to the assertion of your salesperson, other than the initial order, ASDA has not ordered any toner cartridges from Globex and will not accept delivery of any such goods. ASDA will again contact the ACCC if any further unsolicited goods are sent to it or if anyone from Globex Systems contacts any employee of ASDA asserting any right to payment for any such unsolicited goods or makes any further false representations concerning ASDA's alleged ordering of such.' 26 The next day, Ms Martin received a telephone call from the third respondent. Ms Martin said that the following exchange took place: 'I said: The Australian Screen Directors Association. Helen Martin speaking. He said: Hello. My name is Warren Skry. I'm calling from Globex in relation to the letter you faxed through yesterday. I said: Yes. He said: I'm just ringing to apologise profusely for any distress the call from my salesman Tom has caused. We certainly won't be contacting you again in the future. I said: It might be out of my hands as the ACCC are interviewing Jackie at the moment. He said: Tom's normally a very good person but unfortunately we've had some very bad salespeople here and he may have picked up some bad habits from them. Those salespeople have been sacked. The supervisor was on maternity leave that day and was not monitoring the phone calls. I said: Was that Tom that rang yesterday? He said: Yes. I wanted to apologise because this is not how we do business. Please accept my apologies. Tom is normally very good. I said: I don't think this is in my hands anymore. It would have been better if Tom had referred a customer complaint to someone with better diplomacy skills. He said: I apologise. If you are speaking to the ACCC would you convey that I've sent my apologies. I said: Yes.' 27 Approximately ten minutes later, Mr Skry called again and advised Ms Martin that he wanted to apologise in person to Ms Head. Ms Martin told Mr Skry that Ms Head was on the telephone to the ACCC. Mr Skry asked Ms Martin to tell Ms Head that he had called to apologise and asked if Ms Head could ring him back. 28 On 7 February 2005 Ms Martin received a letter from the first respondent signed by the second respondent, which was dated 3 February 2005. The letter was in the following terms: 'I acknowledge receipt of your complaint dated 2nd February 2005 and take this opportunity to apologise for any distress or inconvenience caused to you or your staff. It is not the business practice of Globex Systems or any of our staff to use bullying tactics of any nature or assert a right to payment for goods that were not ordered from Globex Systems Pty Ltd. We have conducted an investigation into the incident and it would appear that there has been a genuine misunderstanding between our sales representative and your company in respect of what goods were ordered previously and expected to be received by your company. As you can appreciate, Globex Systems Pty Ltd has many customers and takes numerous orders daily. On occasion, innocent mistakes do occur due to human error. We can assure you that no salesperson from Globex Systems will be contacting your company again. Should you wish to discuss this matter further please do not hesitate to contact me at your convenience.' 29 The first respondent did not read any affidavit of Mr Brown. In those circumstances, as Mr Alexis SC the first respondent's counsel frankly conceded, the telephone conversations as deposed to by Ms Martin and Ms Head remain uncontradicted. I accept their evidence. 30 The ACCC's counsel, Mr Duggan, described Mr Brown's conduct as rude, offensive and threatening. Mr Alexis did not seek to argue otherwise. I agree with Mr Duggan's characterisation of Mr Brown's conduct. Moreover, the representations made by Mr Brown were untrue. The representations contravened my orders made on 10 January 2005.

THE CHARGES 31 As required by O 40 r 6, the ACCC filed a Statement of Charge. That document, after reciting some of the facts to which I have referred, identified the three charges. The three charges relate to the one conversation between Mr Brown and Ms Head and Ms Martin: 'First Charge 8. During the telephone call the Globex Representative represented to Ms Head that ASDA had an order for ink cartridges, to be supplied by the First Respondent. 9. The representation set out in paragraph 8 herein was not correct in that, as at 2 February 2005, ASDA had no outstanding orders for ink cartridges to be supplied by the First Respondent. 10. The representation set out in paragraph 8 herein was a breach by the First Respondent of Order 1.1 of the orders made by Justice Lander on 10 January 2005. Second Charge 11. During the telephone call the Globex Representative represented to Ms Head that in the event that ASDA cancelled the order it would have to pay Globex a 25% discount that Globex had given ASDA for previous ink cartridges purchased by ASDA. 12. By making the representation set out in paragraph 11 herein the First Respondent, in effect, represented that: a. ASDA had entered into an agreement with the First Respondent to purchase the ink cartridges; and b. it was a term of the agreement that ASDA was obliged to take delivery of ink cartridges. 13. The representation set out in paragraph 11 herein was not correct in that ASDA: a. had not entered into an agreement with the First Respondent to purchase the ink cartridges; b. was not required to take delivery of the ink cartridges. 14. The representation set out in paragraph 11 herein was a breach by the First Respondent of Orders 1.3 and 1.4 of the orders made by Justice Lander on 10 January 2005. Third Charge 15. During the telephone call the Globex Representative represented to Ms Martin that Jackie [a reference to Ms Head] had ordered ink cartridges. 16. The representation set out in paragraph 15 herein was not correct in that, as at 2 February 2005, there were no orders for ink cartridges to be supplied by the First Respondent. 17. The representation set out in paragraph 15 herein was a breach by the First Respondent of Order 1.1 of the orders made by Justice Lander on 10 January 2005.' 32 The first respondent has pleaded guilty to all three charges.

THE RESPONDENTS' ACTIONS IN RELATION TO COMPLYING WITH THE ORDERS 33 The third respondent went overseas on 26 December 2004 and returned to Australia on 5 January 2005. He returned to work on 6 January 2005, by which time the Re-sale Accounts Team had started back at work following upon the Christmas break. 34 The third respondent deposed in his affidavit: '19. On 6 January 2005, I introduced a new procedure in the Re-sale Accounts Team where no goods would go out without first receiving a written confirmation from the customer that the goods had been ordered. I introduced this new procedure in response to receiving the Application and Statement of Claim and even though the interim orders which Globex had agreed to consent to (and which were made by this honourable Court on 10 January 2005) did not require Globex to obtain written confirmation of orders from customers prior to sending out goods. I instructed the Re-Sale Accounts Team staff that in all cases they were to advise customers that they speak to on the telephone to send a written confirmation of order back to Globex. The staff were to ask the customers if they would like an order form sent to them or whether they would like to send in their own written order to Globex. Annexed and marked "WS-7" is a copy of the order form that I have instructed the Re-Sale Accounts Team staff to send to customers if the customers wish to use our order form rather than using their own form to give Globex confirmation in writing. To my knowledge, since 6 January 2005 no goods have been sent out from the Re-Sale Accounts Team without Globex first receiving written confirmation of such an order.' 35 He said that on 6 January 2005 he spoke to the four remaining members of the Re-sale Accounts Team about being served with the application, statement of claim and notice of motion in the principal proceedings. He was told by them that they were already aware of the Court proceedings from discussions had with the fourth and fifth respondents. 36 He said that his conversation with the Re-sale Accounts Team was to the following effect: 'I have put a new procedure in place. No order is to go out without a written confirmation from the customer. We have to change our sales practices. We do not want any more complaints. Soften you [sic] approach. Do not argue with the customer if they do not want the goods.' 37 In my opinion, the conversation is important for what it does not contain. The Re-sale Accounts Team was not advised of the particular complaints which had been made in the statement of claim in the principal proceedings. They were not advised that the first respondent had consented to the orders which were subsequently made or that they would operate from 18 January 2005. They were not advised of the orders or their terms. They were not advised of the provisions of the Trade Practices Act. 38 They were not advised that the first respondent would be in contempt of court if they conducted themselves contrary to the provisions of the agreed orders. 39 They were not advised of the consequences to the first respondent if the first respondent was in contempt of court. 40 There is no evidence that the New Accounts Sales Team was told anything at all or that any new procedure was put in place in respect of their functions. 41 The third respondent went overseas on 9 January 2005 and did not return until 2 February 2005. 42 As can be seen from the terms of the orders, they operated from 18 January 2005. Mr Skry cannot remember whether he was informed of the fact that the orders had been made whilst he was overseas. 43 Because he was due to be absent from Australia, and because he had the responsibility of managing the Re-sale Accounts Team, it seems to me that the third respondent was under a duty to bring to the attention of not only the Re-sale Accounts Team but also the New Accounts Sales Team the precise terms of the injunctions which had been made by the Court, the first respondent's obligations to comply with those orders, and the consequences for the first respondent if its employees conducted themselves contrary to the terms of the injunctions. 44 Clearly, as Mr Alexis conceded, there was a failure to communicate that information. 45 It is even more disconcerting that there is no evidence that since these events occurred that any of those matters have been brought to the attention of any of the employees of the first respondent. Mr Skry has provided no evidence that the first respondent has since 2 February brought those matters to the attention of its employees in either sales team. That is particularly concerning because the first respondent has a large turnover of employees in its New Accounts Sales Team of in the order of 250 persons per year. It is particularly important that all of those persons, however long they are employed, are aware of the terms of the orders and what it means to the first respondent if the orders are breached.

THE FIRST RESPONDENT'S APOLOGIES 46 Mr Skry has tendered an apology on behalf of the first respondent to Ms Martin and Ms Head in the terms to which I have already referred. 47 That apology which was given, I think, at the first available opportunity was fulsome and appropriate. 48 Mr Skry has also offered an apology to the Court and to the ACCC. He says in his affidavit: '34. In retrospect, I realise that as the Sales Director with responsibility for managing the sales staff, I should have done more at an earlier point in time to inform Globex staff members of the nature of the orders made by this Honourable Court which took effect on 18 January 2005, and I should have done more to ensure that staff acted in strict compliance with the Court's orders. In particular, I should have taken steps to discipline Tom Brown and instruct him on proper procedures after the incident on 2 February 2005. For these oversights I sincerely and unreservedly apologise to the Court. I apologise on my own behalf and also on behalf of Globex. While I by no means wish to excuse my behaviour, I offer by way of explanation the fact that I was overwhelmed and confused by the court proceedings which, to my mind, had come as a shock and a surprise. I was also caught up in the rush to close Globex operations for Christmas holidays and was distracted by my two overseas trips. Everything happened in such a rush. In addition, I was aware that staff members were extremely worried about their job security after Emma Gourlay and Clare Trobe ceased their employment with Globex. I did not want to do anything that added to staff members' anxiety about their work situation. 35. I wish to offer my deepest and unreserved apology to the Australian Competition and Consumer Commission and to this Honourable Court for the conduct of Globex which was in breach of the consent orders which took effect on 18 January 2005. I understand the importance of complying with the Court's orders and I understand how serious it is that Globex had failed to do so.' 49 Those apologies seem to me again to be appropriate.

THE FIRST RESPONDENT'S PLEA 50 The first respondent has pleaded guilty to the charges. It was put that it pleaded guilty at the first available opportunity and I accept that submission. 51 It seems to me that the first respondent has behaved appropriately in that regard and in the apologies tendered in relation to the contempt which was occasioned by Mr Brown's telephone conversation. Those matters must be taken into account in mitigation in determining the appropriate penalty.

THE COURT'S POWER 52 Any contempt of court is a very serious matter: Deputy Commissioner of Taxation v Hickey [1999] FCA 259 at [35]; BHP Steel (AIS) Pty Ltd v Construction, Forestry, Mining & Energy Union [2001] FCA 336 at [4]; Adlam v Noack [1999] FCA 1606. Parties to litigation should be entitled to assume that any order made by the Court will be observed both as to the letter and spirit. In some cases, however, the Court's orders are not obeyed. In those cases, the Court must have power to compel a party to comply with its orders otherwise the Court will become powerless. 53 Section 31(1) of the Federal Court of Australia Act 1976 (Cth) provides: '(1) Subject to any other Act, the Court has the same power to punish contempts of its power and authority as is possessed by the High Court in respect of contempts of the High Court. (2) The jurisdiction of the Court to punish contempt of the Court committed in the face or hearing of the Court may be exercised by the Court as constituted at the time of the contempt.' 54 There are at least two reasons for the exercise of the contempt power when an order of the Court has been breached. First, it protects the party who has been given the benefit of the order by ensuring that the order is complied with. Secondly, it protects the administration of justice in that it demonstrates that the Court's orders must be obeyed and the consequences for a breach of those orders: Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 (Mudginberri); and Pelechowski v The Registrar, Court of Appeal (NSW) (1999) 198 CLR 435 per McHugh J at 463 and per Kirby J at 484. 55 No argument was addressed that this Court does not have power to impose a monetary penalty for a contempt which consists of a breach of the Court's order at least where the contempt is not casual, accidental or unintended: Mudginberri at 112. Indeed, so much was conceded. 56 A sentence by way of fine for contempt is punitive. It has the dual objects of disciplining the contemnor and vindicating the authority of the Court: Mudginberri at 112. 57 A contempt may be committed by a company without the company by its servants or agents intending to breach the order: Stancomb v Trowbridge Urban District Council (1910) 2 CH 190 at 194. However, the absence or presence of such an intent is highly relevant in determining how the contempt is categorised and the penalty to be imposed: Attorney-General v Times Newspapers Ltd and Another (1992) 1 AC 191 at 217-218. 58 It was accepted by the first respondent, by entering its plea, that it was responsible for the conduct of its employee and that if the employees conducted themselves contrary to the terms of the order the first respondent would be in contempt. 59 A contempt which is the result of a deliberate act of defiance resulting in a deliberate breach of a Court order will be described as contumacious: Mudginberri at 108; Witham v Holloway (1995) 183 CLR 525 at 530. 60 A wilful contempt is not a contumacious contempt but is something more than 'casual, accidental or unintentional'. A wilful contempt will be committed where, in the case of a company, the company has taken no proper steps to comply with a Court's order. A technical contempt will be committed where a company has taken all reasonable steps to comply with the Court's orders but the breach has been casual, accidental or unintentional.

THE CONTEMPT 61 It is necessary to categorise the first respondent's contempt. Mr Alexis very properly conceded that the contempt was not a technical one because it did not arise accidentally or inadvertently. It was not 'casual, accidental or unintentional'. He conceded, again properly in my opinion, that the contempt was wilful. He submitted that it was not contumacious. I agree with his submission. I think that his concession was properly made. 62 In my opinion, the contempt was wilful but not contumacious.

TWO QUESTIONS TO BE ADDRESSED 63 Two questions were raised on this application; what is the appropriate monetary penalty; and what would be the appropriate order for costs. 64 There are a number of factors to be addressed in determining the appropriate penalty. 65 The seriousness of the behaviour should be addressed. I have already concluded in favour of the first respondent that the first respondent did not intend to breach the orders. On the other hand, the orders imposed no greater obligation on the first respondent than to conduct itself commercially appropriately and not to contravene the Trade Practices Act. 66 Moreover, the first respondent has failed almost entirely to take any adequate or appropriate steps to inform its employees of the terms of the agreement entered into on 24 December 2004, the terms of the orders made on 10 January 2005, the conduct to which the orders were directed, the conduct which was prohibited, the consequences to the first respondent if any employee conducted himself/herself contrary to the terms of the order and the seriousness of a breach of the orders. 67 Its failure arose in circumstances where the New Accounts Sales Team comprised casual employees, including casual team leaders; the team leader of the Re-sale Accounts Team was absent on leave; and the third respondent who had joint responsibility for leadership of that team was overseas. In those circumstances, there was even greater responsibility imposed upon the first respondent to educate its employees, both casual and permanent, of the matters to which I have referred. 68 It is important that the penalty should be such that it brings home to the first respondent the seriousness of its conduct. 69 The telephone conversations to which Ms Martin and Ms Head were subjected demonstrated arrogance on the part of the member of the Re-sale Accounts Team. It was coupled with threatening behaviour. A number of false representations were made. The conduct was outrageous. 70 In addressing penalty it is relevant to determine whether the contemnor has offered any explanation for its conduct. In this case, the first respondent has explained how the contempt occurred. It has not done so for the purpose of excusing itself but so that the Court can understand the circumstances giving rise to the contempt. That is a matter in the first respondent's favour: Gallagher v Durack (1983) 152 CLR 238 at 245. 71 I should also address the first respondent's apologies and plea. 72 As I have already said, the first respondent has behaved appropriately after Mr Brown's behaviour was brought to the attention of its directors in the manner of the apologies offered and in pleading guilty at the first available opportunity. 73 The first respondent's apologies and its plea demonstrate contrition and remorse on its part for its breach of the Court's orders. It also demonstrates a willingness to cooperate in the administration of justice. It would be appropriate to recognise the apologies and the timely plea by reducing the penalty which would otherwise have been imposed. I intend to reduce the penalty which I would otherwise have imposed by 30 per cent to recognise those matters. I think it is appropriate to indicate the amount of the reduction so that the first respondent can see the extent to which the Court has recognised its plea in the penalty. 74 It is a matter of concern that there is no evidence that since the contempt the first respondent has offered any proper education of its employees in the orders which remain in place. There is no evidence that any better system has been put in place to ensure that no further contempt takes place. Moreover, there is no evidence that it has informed its employees that it intended to plead guilty to these serious charges. However, those matters cannot be used against the first respondent as an aggravating feature. It means that I cannot have regard to what should have been done as a mitigating feature. 75 In determining the appropriate penalty regard should be had to the penalties imposed in like circumstances. No two circumstances will ever be the same but penalties imposed in other cases will serve to indicate the appropriate range of penalties for contempts of this kind. 76 I have had regard to the cases to which my attention has been directed. I do not think it would be useful to identify these cases and the circumstances of the contempts under consideration or the penalties imposed. In assessing penalty, I have been careful to leave out of account penalties which have been imposed where there was more than one contempt or there was a subsequent contempt. I have also been careful to note those cases where the contemnor required the moving party to prove the contemnor's guilt. 77 In this case, the ACCC argued that a penalty of not less than $15,000, even after a discount for the first respondent's plea, should be imposed. 78 On the other hand, the first respondent argued that a penalty in the range of $2,000 to $4,000 would be appropriate. 79 Not surprisingly, it is my opinion that the appropriate penalty is somewhere between the two figures contended for by the parties. 80 In my opinion, the appropriate penalty, before discount, would be in the sum of $7,000. As I have already indicated, I would reduce that penalty by 30 per cent which results in a fine of $4,900. 81 The ACCC argued that I should make an order that the first respondent pay the ACCC's costs on an indemnity basis. The first respondent acknowledged that it should be ordered to pay the costs of the notice of motion but submitted that the order should be on a party and party basis. 82 Ordinarily, of course, costs are awarded on a party and party basis: Colgate-Palmolive Company & Another v Cussons Pty Limited (1993) 46 FCR 225. However, an order for costs on an indemnity basis might be made where there is some special or unusual feature in the case which would allow it to be said that such an order was warranted in the interests of justice. There is no general rule that where a party has been found guilty of contempt the party should pay the moving party's costs on an indemnity basis: Construction, Forestry, Mining and Energy Union v BHP Steel (AIS) Pty Ltd (2003) 196 ALR 350 at [6]. However, orders for costs on an indemnity basis, where a contempt has been proved, are common in the Chancery Division of the High Court in English: E.M.I. Records Ltd v Ian Cameron Wallace Ltd (1983) 1 Ch 59 at 65. 83 Like any other order for costs, the costs are in the discretion of the Court. The discretion, of course, must be exercised judicially. 84 In this case, the ACCC was obliged to bring these proceedings to ensure that the orders of this Court were complied with. It did so because of its charter that it act in the public interest. 85 The principal proceedings have been brought to protect the public. The orders made on 10 January 2005 were no more than orders that required the first respondent to act appropriately and not contravene provisions of the Trade Practices Act. Mr Brown's conduct was, as has been recognised by this plea, a contravention of that Act. 86 In the circumstances, it seems to me, it would be appropriate to require the first respondent to pay the ACCC's costs on an indemnity basis and there will be an order to that effect. 87 Where a Court proposes to order indemnity costs that fact can be taken into account in determining the penalty: Construction, Forestry, Mining and Energy Union v BHP Steel (AIS) Pty Ltd (2003) 196 ALR 350. 88 However, where the Court is considering awarding indemnity costs the Court usually cannot know what the effect of an order for indemnity costs would be in that matter. It does know that such an order will increase the costs payable by the contemnor but it cannot know to what extent. That is the case here. 89 However, in considering the penalty which I have imposed, I took into account that I intended, in the exercise of my discretion, to order that the first respondent pay the ACCC's costs on an indemnity basis. If I had not made an order that the first respondent pay indemnity costs the penalty would have been higher. The orders of the Court will be: 1. The first respondent pay by way of penalty the sum of $4,900 to the District Registrar, South Australia District Registry, Federal Court of Australia on or before 7 June 2005 for the first respondent's contempt of court on 2 February 2005. 2. The first respondent pay the Australian Competition & Consumer Commission's costs of and incidental to the application in the notice of motion filed on 21 February 2005 for contempt, such costs to be taxed on an indemnity basis. I certify that the preceding eighty-nine (89) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Lander.

Counsel for the Applicant: Mr T Duggan

Solicitor for the Applicant: Australian Government Solicitor

Counsel for the First, Second and Third Respondents: Mr T Alexis

Solicitor for the First, Second and Third Respondents: Von Muenster Solicitors & Attorneys

Date of Hearing: 18 April 2005

Date of Judgment: 10 May 2005

Trade Practices Act 1974(Cth)

At a glance

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Judgment (16 paragraphs)

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Legislation Cited (2)

Cases Cited (9)

Cited By (2)