Australian Competition & Consumer Commission v Hughes

Federal Court of Australia|2004-04-29|Before: Allsop J, Sackville J, Tamberlin J, Conti J

THE COURT DECLARES THAT: 1. The respondent is guilty of contempt of this Court in that in breach of Order 6 made by Justice Allsop on 18 March 2002, the respondent Richard David Hughes: (a) From on or about 28 February 2003 offered for sale the following oral contraceptives to persons in the United States of America: (i) Microgynon 50 ED, Levlen 30ED, Loette, Logynon ED, Triquilar Ed, Diane 35ED, Marvelon 28, Femoden ED, Norimin 28 500/35, Norimin 28 1000/35, Microval 28, Noriday 28 and Norlevo. (b) On or about 27 March 2003 sold Levlen ED to a person in the United States of America, Marc Griswold using the name Michelle Dorsey of Baltimore Avenue, Laurel, Maryland. (c) On or about 14 April 2003 supplied Levlen ED to a person in the United States of America, Marc Griswold using the name Michelle Dorsey of Baltimore Avenue, Laurel, Maryland. 2. The respondent is further guilty of contempt of this Court in that in breach of Order 5 made by Justice Allsop on 18 March 2002, the respondent Richard David Hughes: (a) From on or about 28 February 2003 offered for sale oral contraceptives in Australia, without disclosing in relation to that offer, in a promotional medium used by the Respondent, namely the World Wide Web site on the internet at http://www.users.bigpond.com/dilipili/ in clear readable type of at least font size 20 in Times New Roman: (i) that it is illegal to supply the oral contraceptives Microgynon 50ED, Loette, Levlen ED, Triquilar ED, Logynon ED, Norimin 28 day, Brenda 35ED, Marvelon 28, Femoden ED, Microval, Noriday 28 day, Diane - 35 and Norlevo to persons in Australia without prescription; (ii) that it is illegal for a person to acquire the oral contraceptives Microgynon 50 ED, Loette, Levlen ED, Triquilar ED, Logynon ED, Norimin 28 day, Brenda 35ED, Marvelon 28, Femoden ED, Microval, Noriday 28 day, Diane - 35 and Norlevo in Australia without a prescription; (iii) that there are significant health risks in taking some oral contraceptives without first obtaining medical advice about the suitability of those medications for use by the particular individual; (iv) that within Australia free medical assistance, including where appropriate the issuing of a prescription, is available to Australian citizens and permanent residents who are contemplating using oral contraceptives; and (v) that it is significantly less expensive to obtain oral contraceptives upon prescription from a pharmacy in Australia that it is to buy them from the respondent. (b) On or about 2 April 2003 sold Levlen 30ED to Jeremy Roach using the name Susan Roach in Australia without disclosing in relation to that sale, in a promotional medium used by the respondent, namely the World Wide Web site on the internet at in clear readable type of at least font size 20 in Times New Roman: (i) that it is illegal to supply the oral contraceptives Microgynon 50ED, Loette, Levlen ED, Triquilar ED, Logynon ED, Norimin 28 day, Brenda 35 ED, Marvelon 28, Femoden ED, Microval, Noriday 28 day, Diane - 35 and Norlevo to persons in Australia without prescription; (ii) that it is illegal for a person to acquire the oral contraceptives Microgynon 50 ED, Loette, Levlen ED, Triquilar ED, Logynon ED, Norimin 28 day, Brenda 35ED, Marvelon 28, Femoden ED, Microval, Noriday 28 day, Diane - 35 and Norlevo in Australia without a prescription; (iii) that there are significant health risks in taking some oral contraceptives without first obtaining medical advice about the suitability of these medications for use by the particular individual; (iv) that within Australia free medical assistance, including where appropriate the issuing of a prescription, is available to Australian citizens and permanent residents who are contemplating using oral contraceptives; and (v) that it is significantly less expensive to obtain oral contraceptives upon prescription from a pharmacy in Australia than it is to buy them from the respondent.

THE COURT ORDERS THAT: 3. The respondent Richard David Hughes be imprisoned for a period of six months commencing from today, whereof the first two months must be served in any event. 4. The balance of the above sentence of six months shall be suspended from execution upon the basis however that if the respondent hereafter breaches Order 5 or Order 6 the subject of the foregoing declaratory relief, that provision for suspension shall be deemed to so operate to the effect that the respondent must thereupon be imprisoned for at least the remainder of the six month period not served, namely that residual period of four months. 5. (a) The respondent Richard David Hughes be further ordered to transfer the registration of the domain name in respect of the CrowdedPlanet website being http://www.users.bigpond.com/dilipili/ ('the domain name') to the applicant Australian Competition and Consumer Commission ('the Commission') within fourteen days of the date of this order. (b) The respondent Richard David Hughes take all such steps, perform all such acts and sign all such documents as may be reasonably required of him by the Commission within fourteen days of the date of this order, in order to effect the transfer of the registration of the domain name to the Commission. 6. If the respondent does not: (a) transfer the registration of the domain name to the Commission within fourteen days of the date of those orders; or (b) otherwise take all such steps, perform all such acts and sign all such documents as may be reasonably required of him by the Commission within fourteen days of the date of these orders to effect the transfer of the registration of the domain name to the Commission. the Commission is hereby authorised pursuant to Order 37 rule 3 of the Federal Court Rules to take all such steps, perform all such acts and sign all such documents as may be required to enable the registration of the domain name to be transferred to it. 7. Upon the transfer of the registration of the domain name to the Commission, the Commission may place on the worldwide web at a site accessed through the domain name a notice in accordance with the provisions of Schedule 'A' to these orders. 8. The respondent pay the Commission's costs of and incidental to this application. 9. Either party have liberty to apply to the Court on seven days' prior notice in writing given to the other party in relation to the implementation or carrying into effect of the above orders.

SCHEDULE A The Notice shall: (a) be legible and the type shall be at least 12 point, Times New Roman font and right and left justified; (b) have a bold prominent heading in at least 18 point; (c) appear in an automatically generated active pop-up window or message box, whereby a member of the public is required to interact with the window or message box to close it; (d) not be less than 50% of the size of the computer screen; (e) appear immediately upon access by a customer to the homepage of the CrowdedPlanet website and shall provide a hotlink to the website address http://www.accc.gov.au; and (f) be in the following terms: CONSUMER NOTICE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Re: CrowdedPlanet and Richard David Hughes CrowdedPlanet wishes to advise that the offering for sale or supply, and the sale or supply of birth control pills on and from this website, was in breach of the Trade Practices Act 1974, because by failing to advise certain information, consumers may have been misled. You should be aware of the following information: (a) it is illegal to supply and purchase the oral contraceptives listed on the CrowdedPlanet website in Australia without a prescription, and it is illegal to supply the oral contraceptives listed on the CrowdedPlanet website the United States of America without a prescription; (b) there are significant health risks in taking some oral contraceptives without first obtaining medical advice about the suitability of those medications for use by the particular individual; (c) within Australia free medical assistance, including where appropriate the issuing of a prescription, is available to Australian citizens and permanent residents who are contemplating using oral contraceptives; and/or (d) it is significantly less expensive to obtain oral contraceptives upon prescription from a pharmacy than it is to buy them from CrowdedPlanet. Any consumers with inquiries about this notice may contact the Australian Competition and Consumer Commission on phone number 1300 302 502 or visit the website at [hotlink to:] http://www.accc.gov.au. This notice has been placed pursuant to an order of the Federal Court of Australia as a result of action taken by the Australian Competition and Consumer Commission pursuant to s 52 of the Trade Practices Act 1974 (Cth). Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

BETWEEN: AUSTRALIAN COMPETITION AND CONSUMER COMMISSION

The nature of the present proceedings for contempt of Court 1 On 24 September 2003 Australian Competition and Consumer Commission ('ACCC') moved the Court for declaratory relief and subsequent orders that the respondent Richard David Hughes ('Mr Hughes') be found guilty of contempt of Court. This alleged contempt arises from apparent breaches of orders made by Allsop J of this Court on 18 March 2002. These orders were preceded by declarations sought as to the conduct engaged in by Mr Hughes (see ACCC v Hughes (2002) ATPR 41-863). Leave to appeal against his Honour's orders and reasons for judgment was refused by Sackville J on 18 July 2002 (Hughes v ACCC (2002) FCA 915). 2 The orders made by Allsop J, the subject of the present contempt changes, were in these terms: '5. The respondent be restrained, by himself, his servants, agents or otherwise howsoever, from offering for sale and/or selling and/or supplying oral contraceptives in Australia, without disclosing in relation thereto in any promotional medium used by the respondent including any internet site, in clear readable type of at least font size 20 in Times New Roman: (a) that it is illegal to supply the oral contraceptives Microgynon 50 ED, Loette, Levlen ED, Triquilar ED, Logynon ED, Norimin 28 day, Brenda 35 ED, Marvelon 28, Femoden ED, Microval, Noriday 28 day, Diane - 35 and Norlevo to persons in Australia without prescription; (b) that it is illegal for a person to acquire the oral contraceptives Microgynon 50 ED, Loette, Levlen ED, Triquilar ED, Logynon ED, Norimin 28 day, Brenda 35 ED, Marvelon 28, Femoden ED, Microval, Noriday 28 day, Diane - 35 and Norlevo in Australia without a prescription. (c) that there are significant health risks in taking some oral contraceptives without first obtaining medical advice about the suitability of those medications for use by the particular individual; (d) that within Australia free medical assistance, including where appropriate the issuing of a prescription, is available to Australian citizens and permanent residents who are contemplating using oral contraceptives; and (e) that it is significantly less expensive to obtain oral contraceptives upon prescription from a pharmacy in Australia than it is to buy them from the respondent. 6. The respondent be restrained, by himself, his servants, agents or otherwise howsoever, from offering for sale and/or selling and/or supplying the oral contraceptives in Attachment "A" to persons in the United States of America.' It should be noted that the reference by his Honour to 'Attachment A' in Order 6 above was to a list of pharmaceutical products essentially the same as those listed in Orders 5(a) and 5(b). 3 The breach of these orders is alleged, by Amended Statement of Charge filed 16 December 2003, to have occurred in that Mr Hughes (in relation to Order 6): (a) From on or about 28 February 2003 offered for sale the following oral contraceptives to persons in the United States of America:- (i) Microgynon 50 ED, Levlen 30ED, Loette, Logynon ED, Triquilar ED, Diane 35ED, Marvelon 28, Femoden ED, Norimin 28 500/35, Norimin 28 1000/35, Microval 28, Noriday 28 and Norlevo. (b) On or about 27 March 2003 sold Levlen ED to a person in the United States of America, Marc Griswold using the name Michelle Dorsey of Baltimore Avenue, Laurel, Maryland. (c) On or about 14 April 2003 supplied Levlen ED to a person in the United States of America, Marc Griswold using the name Michelle Dorsey of Baltimore Avenue, Laurel, Maryland. 4 Further, in relation to Order 5 made by Allsop J on 18 March 2002, the Amended Statement of Charge alleges that Mr Hughes: (a) From on or about 28 February 2003 offered for sale oral contraceptives in Australia, without disclosing in relation to that offer, in a promotional medium used by the respondent, namely the World Wide Web site on the internet at http://www.users.bigpond.com/dilipili/ in clear readable type of at least font size 20 in Times New Roman: (i) that it is illegal to supply the oral contraceptives Microgynon 50ED, Loette, Levlen ED, Triquilar ED, Logynon ED, Norimin 28 day, Brenda 35 ED, Marvelon 28, Femoden ED, Microval, Noriday 28 day, Diane - 35 and Norlevo to persons in Australia without prescription; (ii) that it is illegal for a person to acquire the oral contraceptives Microgynon 50 ED, Loette, Levlen ED, Triquilar ED, Logynon ED, Norimin 28 day, Brenda 35ED, Marvelon 28m, Femoden ED, Microval, Noriday 28 day, Diane - 35 and Norlevo in Australian without a prescription; (iii) that there are significant health risks in taking some oral contraceptives without first obtaining medical advice about the suitability of those medications for use by the particular individual; (iv) that within Australia free medical assistance, including where appropriate the issuing of a prescription, is available to Australian citizens and permanent residents who are contemplating using oral contraceptives; and (v) that it is significantly less expensive to obtain oral contraceptives upon prescription from a pharmacy in Australia than it is to buy them from Mr Hughes. (b) On or about 2 April 2003 sold Levlen 30ED to Jeremy Roach using the name Susan Roach in Australia without disclosing in relation to that offer, in a promotional medium used by the Respondent, namely the World Wide Web site on the internet at http://www.users.bigpond.com/dilipili/ in clear readable type of at least font size 20 in Times New Roman: (i) that it is illegal to supply the oral contraceptives Microgynon 50ED, Loette, Levlen ED, Triquilar ED, Logynon ED, Norimin 28 day, Brenda 35 ED, Marvelon 28, Femoden ED, Microval, Noriday 28 day, Diane - 35 and Norlevo to persons in Australia without prescription; (ii) that it is illegal for a person to acquire the oral contraceptives Microgynon 50 ED, Loette, Levlen ED, Triquilar ED, Logynon ED, Norimin 28 day, Brenda 35ED, Marvelon 28m, Femoden ED, Microval, Noriday 28 day, Diane - 35 and Norlevo in Australian without a prescription; (iii) that there are significant health risks in taking some oral contraceptives without first obtaining medical advice about the suitability of those medications for use by the particular individual; (iv) that within Australia free medical assistance, including where appropriate the issuing of a prescription, is available to Australian citizens and permanent residents who are contemplating using oral contraceptives; and (v) that it is significantly less expensive to obtain oral contraceptives upon prescription from a pharmacy in Australia than it is to buy them from Mr Hughes. 5 The ACCC moved the Court for the following orders, in the context of the declaratory relief sought: (i) that Mr Hughes be punished for contempt of the Court; (ii) Mr Hughes be ordered: (a) to transfer the registration of the domain name in respect of the Crowded Planet website being http://www.users.bigpond.com/dilipili/ ('the domain name') to ACCC within 14 days of the order; and (b) to take all such steps, perform all such acts and sign all such documents as may be required of him by ACCC within 14 days of the order to effect the transfer of the registration of the domain name to ACCC. (iii) That Mr Hughes be further ordered that if: (a) Mr Hughes did not transfer the registration of the domain name to ACCC within 14 days of the date of that order; or (b) Mr Hughes did not take all such steps, perform all such acts and sign all such documents as may be required of him by ACCC within 14 days of the date of that order to effect the transfer of the registration of the domain name to ACCC; ACCC would be authorised pursuant to Order 37 rule 3 of the Federal Court Rules to take all such steps, perform all such acts or sign all such documents as may be required to enable the registration of the domain name to be transferred to it; (iv) That upon the transfer to ACCC of the registration of the domain name, ACCC be authorised to place on the worldwide web at a site accessed through the domain name a notice in accordance with the provisions of Schedule A thereto (reading as follows): SCHEDULE A The Notice (a) shall be legible and the type shall be at least 12 point, Times New Roman font and right and left justified; (b) shall have a bold prominent heading in at least 18 point; (c) shall appear in an automatically generated active pop-up window or message box, whereby a member of the public is required to interact with the window or message box to close it; (d) shall not be less than 50% of the size of the computer screen; and (e) shall appear immediately upon access by a customer to the homepage of the CrowdedPlanet website and shall provide a hotlink to the website address http://www.accc.gov.au. 2. The notice shall be in the following terms: CONSUMER NOTICE AUSTRALIAN COMPETITION AND CONSUMER COMMISSION Re: CrowdedPlanet and Richard David Hughes CrowdedPlanet wishes to advise that the offering for sale or supply, and the sale or supply of birth control pills on and from this website was in breach of the Trade Practices Act 1974, because by failing to advise certain information consumers may have been misled. You should be aware of the following information. (a) it is illegal to supply and purchase the oral contraceptives listed on the CrowdedPlanet website in Australia without a prescription, and it is illegal to supply the oral contraceptives listed on the CrowdedPlanet website the United States of America without prescription; (b) there are significant health risks in taking some oral contraceptives without first obtaining medical advice about the suitability of those medications for use by the particular individual; (c) within Australia free medical assistance, including where appropriate the issuing of a prescription, is available to Australian citizens and permanent residents who are contemplating using oral contraceptives, and/or (d) it is significantly less expensive to obtain oral contraceptives upon prescription from a pharmacy than it is to buy them from CrowdedPlanet. Any consumers with inquiries about this notice may contact the Australian Competition and Consumer Commission on phone number 1300 302 502 or visit the website at [hotlink to:] http://www.accc.gov.au. This notice has been place pursuant to an order of the Federal Court of Australia as a result of action taken by the Australian Competition and Consumer Commission pursuant to s 52 of the Trade Practices Act 1974 (Cth). (v) Alternatively to order (iv) above, an order pursuant to s 86C of the Trade Practices Act 1974 requiring Mr Hughes at his own expense to cause to be published within 14 days of the making of this order, on the worldwide web at a site accessed through the domain name or any other internet site managed or controlled by him or in any other promotional material or medium used by him, on which or in which, oral contraceptives are offered for sale or supply, a notice in clear readable type of at least font size 20 Times New Roman (or such font size and style as best approximates this): (a) that it is illegal to supply oral contraceptives to persons in Australia and the United States of America without prescription; (b) that it is illegal for a person to acquire oral contraceptives in Australia without a prescription; (c) that there are significant health risks in taking some oral contraceptives without first obtaining medical advice about the suitability of those medications for use by the particular individual; (d) that within Australia free medical assistance, including where appropriate the issuing of a prescription, is available to Australian citizens and permanent residents who are contemplating using oral contraceptives; and (e) that it is significantly less expensive to obtain oral contraceptives upon prescription from a pharmacy in Australia than it is to buy them from CrowdedPlanet. (vi) Mr Hughes be further ordered to pay ACCC's costs of and incidental to the application. 6 It was additionally asserted by ACCC that the conduct of Mr Hughes in contempt of the Court's orders was, in the whole of the circumstances contumacious, in that the conduct was undertaken in conscious defiance of the authority of the Court. 7 Prior to the proceedings conducted before Allsop J, ACCC had brought proceedings against Mr Hughes, the presiding judge being Tamberlin J of this Court. The circumstances giving rise to those proceedings were that Mr Hughes, trading as 'CrowdedPlanet', had operated an internet site from which he sold contraceptive pills to persons in Australia who did not have a prescription for such products. On 9 November 2000, Tamberlin J ordered that Mr Hughes post on that internet site a notice to the effect that oral contraceptives would not be sold or supplied to anyone in Australia, and further that Mr Hughes be restrained from making misleading and deceptive representations, and requiring him to cause to be published an advertisement correcting a false and misleading or deceptive representation which had previously been published on that internet site. Subsequently on 2 February 2001, his Honour found that Mr Hughes was guilty of contempt of this Court, because he had failed to cause the required notice to be posted on the relevant internet site, and that the contempt was serious and without mitigating circumstances. 8 In terms of appropriate punishment for Mr Hughes' actions, the imposition of a fine was considered by his Honour not to have been adequate, because that course would not have brought home to the applicant the gravity of his contempt, and that the imposition of two weeks' imprisonment was warranted. However since Mr Hughes had not acted for the purpose of making a profit, but in the interests of advancing the public good as he saw it, his Honour considered that it was appropriate to suspend that term of imprisonment on the condition that Mr Hughes amend the interest site as required by the order within 30 days (ACCC v Hughes (2001) ATPR 41-807). Nevertheless that course was not implemented, and the warrant for imprisonment was executed, after a further hearing before his Honour. The term thereof was from 9 March 2002 to 22 March 2002, and was served in New South Wales.

The evidence adduced by ACCC in the present proceedings upon the issue of contempt 9 The testimony first adduced by ACCC in support of ACCC's case for contempt comprised two affidavits of Marc Scott Griswold, a United States resident, sworn respectively on 22 October 2003 and 15 December 2003. Immediately prior to Mr Griswold appearing from the United States by video link in this Court, Mr Hughes indicated that he did not seek to cross-examine Mr Griswold, stating that '… I have no quarrel with that material'. Mr Griswold is a senior special agent of the Food and Drug Administration of the Office of Criminal Investigations in Maryland (USA). That course adopted by Mr Hughes resulted of course in the saving at least of a measure of video link costs, apart from the Court time which otherwise would have been involved in the conduct of the final hearing. Mr Griswold gave affidavit evidence of ordering in March 2003, and subsequent receiving in the US from Australia in April 2003, Levlen 30ED, the order being placed on Mr Hughes' internet account operated in Australia, for which Mr Griswold caused to be paid $US55.83 to Mr Hughes in Australia. 10 The testimony secondly adduced by ACCC in support of its case for contempt was given by Mr Matelski, a highly qualified United States attorney at law for many years engaged in practice in Washington and specialising in food and drug law in the United States; he happened to be already visiting Australia and hence gave his evidence viva voce. He testified that Levlen ED was not approved by the United States Food and Drug Administration ('FDA'), and thus could not be legally sold or distributed in the United States, the penalty for infringement being imprisonment and/or pecuniary penalty. It is unnecessary for me to further record the detail of Mr Matelski's affidavit and subsequent oral testimony, which demonstrated highly qualified expertise, save as to indicate that he pointed to distinctions of relevance, as oral contraceptive pills, between 'Levlen 28 Tablets' and 'Levlen 21 Tablets' on the one hand, and 'Hughes Levlen ED' on the other. In the United States (as in Australia), Mr Matelski explained, oral contraceptives may only be sold by a doctor's prescription. Mr Hughes questioned Mr Matelski at some length, and it is appropriate to observe, did so respectfully. 11 Other affidavit testimony tendered by ACCC, largely of a more formal nature, comprised the following: (i) Michelle Novotny, a handwriting expert, sworn 10 October 2003; (ii) Jeremy Craig Roach, an ACCC investigator, sworn 29 October 2003; his testimony was of an entrapment nature, and related to an offer to supply, though not any subsequent actual supply; he was cross-examined in some detail by Mr Hughes; (iii) Matthew Douglas French, also an ACCC investigator, who was not cross-examined by Mr Hughes on his affidavit sworn 29 October 2003; (iv) Nicholas Steven Ellis, a senior ACCC investigator, as to two of the three of his filed affidavits, namely those of 29 October and 31 October 2003; he was cross-examined by Mr Hughes; there was also tendered exhibit A1 to Mr Ellis' earlier affidavit of 24 September 2003, but no other aspect or segment of that initial affidavit; his testimony related largely to what appeared on the 'CrowdedPlanet' website of Mr Hughes on or about 28 February 2003; (v) Ulrich Adami, whose affidavit sworn on 30 October 2003 deposed to the circumstance that the access to the internet in Australia utilises telephone services in Australia; and (vi) Ian McNeilly, the ACCC solicitor having the conduct of the proceedings, whose affidavits sworn on 3 May 2002 and 29/30 October 2003, related to essentially formal matters such as service of the orders of Allsop J, and compliance with the requirements of s 78B of the Judiciary Act 1903 (Cth). The first day of the hearing was largely taken up by the adducement of this, and what I shall summarise in the next segment of these reasons.

The applicant's incarcerations unrelated to the ACCC proceedings 12 The incarceration of Mr Hughes in Australia for offences of assault or threatened assault, being apart from the two weeks sentence imposed by Tamberlin J for contempt of this court (see [8] above), emerged in the course of the proceedings. The first of those matters is recorded in the transcript as shortly follows, being material volunteered by Mr Hughes. The context was the contempt of court proceedings conducted before Tamberlin J at the initiative of ACCC, to which reference has already of course been made, and in relation to which a two weeks custodial offence was imposed for breach of injunctions of this Court. I extract below from the transcript of what Mr Hughes testified to the Court concerning the first incident of assault, in relation to which he was apparently separately dealt with and imprisoned. 'MR HUGHES: And my writing is pretty dreadful. May I just finish off this secret incident? It is perhaps better just to try and summarise it because you won't know how dreadful it was. I knew I was going to gaol for 2 weeks. In my muddled brain I thought I was going to gaol as a martyr for a higher cause. I brought with me from South Australia a scientific computer - it was actually in summary a weather computer. HIS HONOUR: At that stage you were living in South Australia? MR HUGHES: Since '99 I've been commuting backwards and forwards once a month between Wollongong and South Australia, particularly Kangaroo Island which is a very windy island with very poor quality electricity. I had a weather computer with 1 month's intensive data init. I had been warned by the people who made the weather computer that if the battery went flat I would lose the data. I did own a lap-top computer at that stage. The box on the mast could have been downloaded for a lap-top but I didn't have a lap-top at that stage, I brought it back with me. Knowing that I was being imprisoned for 2 weeks because the Judge had forewarned me and telegraphed his… well in advance, I attempted to plug it into the wall to fully charge the battery before I was taken off to the MRRC. The court attendant thought it was a bomb. I lost my temper and said sarcastically but loudly and rudely and bad-temperedly, "Of course it's a bomb" and it was taken to be a bomb and then I served 12 months in prison.' I refer to that evidence solely as background material which arose in the course of the proceedings before me. It is not material which bears upon the offences the subject of the present application concerning conduct in contempt of Court. 13 The second matter is also divorced from Mr Hughes' conduct the subject of ACCC's complaint, but tends to complicate the implications of incarceration in relation to the contempt the subject of the present proceedings. Mr Hughes is presently incarcerated in the State of South Australia, pending assault charges being heard, and was brought to Sydney to attend the present proceedings for contempt accompanied by law enforcement officers each day of the hearing. In fairness to senior counsel for ACCC, who conducted the case for ACCC with entire fairness and courtesy to Mr Hughes, he interjected to suggest that Mr Hughes might not volunteer, in his own interests, what he was then anticipated to volunteer in evidence to the Court concerning his present incarceration circumstances. 14 What Mr Hughes proceeded nevertheless to state to the Court in that context was as follows (inter alia): '… it is just to do with an incident that happened on… Kangaroo Island that is windy where I still have weather masts. … I am still on remand. I haven't been sentenced. … It is going to trial in May and I've been held on remand - because I've got an address in New South Wales and they consider me a flight risk.' What the New South Wales address happened to be was not particularised. The term of this current imprisonment in South Australia apparently remains on foot pending the trial of Mr Hughes for assault commenced on 11 July 2003. Why it has taken so long for the trial to take place in Court does not appear in the evidence. Mr Hughes was imprisoned by order of a magistrate in a South Australian lower court, having been refused bail. Mr Hughes described the charge against him as an '[a]ssault with water', and as classified under South Australian law as 'minor indictable… causing actual harm, not grievance (sic) harm'. The assault was said by Mr Hughes to have occurred in the following circumstances: '… before I was arrested I attempted to cancel all my credit cards and by cancelling the credit card I think cancelled the web site. It was my intention to cancel the web site as I cancelled the credit card. … Well, I was sitting there writing letters - because often you have got to do these things in writing - and then all of a sudden I was arrested by a Star Squad and I'm not sure whether those letters were ever posted. … Police which machine guns and all that stuff. They dragged me out of the house and I said, "Can I post these letters" and they said, "No, lie on the ground", that sort of thing. … It is unrelated to these matters, yes. The only thing that is related to these matters is I was hoping to produce my laptop computer which would show the record of the website. The South Australian Police hold that laptop and won't release it, despite Mr McNeilly's best efforts… the website carried the full Allsop judgment with the orders.' The reference to Mr McNeilly is of course to ACCC's solicitor having the conduct of the present proceedings. 15 It is in fact common ground that Mr Hughes' present incarceration, pending his trial in a magistrate's court in South Australia, is unrelated to his conduct complained of by ACCC. That present incarceration, and the inherent uncertainty from my perspective of the outcome of the pending trial, at least potentially complicates the circumstances of any imprisonment for contempt of the Federal Court orders.

The conduct of Mr Hughes relevantly to the subject proceedings for contempt 16 Mr Hughes' response to these contempt proceedings, prior to commencement of the actual hearing, was to raise a number of issues in the nature of challenges to the viability of ACCC's causes of action which had been presented against him from the outset of the proceedings before Tamberlin J and in particular also before Allsop J. These issues were the subject of a number of purported notices of motions prepared during Mr Hughes' incarceration in the Adelaide Remand Centre, which were faxed from there to this Court and ACCC, though not formally filed. The only practical course for the Court to adopt has been nevertheless to treat this faxed material as formally filed, a course to which ACCC has sensibly not objected. The first issues raised were purportedly of a constitutional nature, namely the existence or otherwise of powers in the Commonwealth, (as set out in a form headed 'Notice of Constitutional Matter' dated 4 November 2003), as follows: (i) to legislate and exercise administrative power in relation to a 'State-registered sole trader', not being of course a corporation; (ii) to legislate in relation to the content of communications sent 'through the use of telephonic services'; (iii) to legislate in relation to matters arising under the Poisons Act of the State of New South Wales; (iv) to protect internet consumers in the United States of America; and (v) to protect the profits and interests of foreign pharmaceutical cartels. The jurisdiction of the Federal Court to determine those constitutional issues supposedly involved was thus purportedly invoked by Mr Hughes. 17 The second set of issues sought to be raised by Mr Hughes in the present proceedings were set out in a notice of motion dated 1 December 2003, apparently assembled in reaction to Mr Griswold's affidavit of 22 October 2003 filed by ACCC, which notice of motion in effect required Mr Griswold to provide certain documents and information. 18 The third set of issues sought to be raised by Mr Hughes were set out in an unfiled notice of motion dated 15 December 2003 headed 'Matelski", doubtless in reaction to Mr Matelski's affidavit of 9 December 2003; this notice of motion purportedly required Mr Matelski to provide (inter alia) information regarding 'US Levlen 28' pills, and to disclose his history of employment by pharmaceutical and drug companies, and also purportedly required ACCC to take certain affirmative courses of action, including taking possession of Mr Hughes' Toshiba laptop computer from the South Australia Police (the context to the computer initiative is the arrest for alleged assault referred to in [14] above). 19 The fourth set of issues sought to be raised by Mr Hughes by notice of motion was formulated in an undated and unfiled notice of motion faxed to the Court on 13 January 2004, and headed 'XMAS'. The theme of this purported notice of motion may be described as an appeal to the Court to comprehend his endeavours as a sole trader to trade 'in the globalised marketplace using the internet and email', and contained an offer '… to cease and desist all dreams and activities in any way related to selling oral contraceptives to anyone over the Internet, if [ACCC] donates a sum equal to their costs to or [to be] used to create birth control and family planning clinics in East Timor and/or West Iran and/or Papua New Guinea and/or the Soloman Islands'. 20 In relation to the relief sought by those notices of motions, Mr Hughes provided to the Court eight affidavits purportedly made by himself, only one bearing the signature of a justice of the peace, though all but one being signed by Mr Hughes. As I might have expected from a tertiary educated and qualified man of obvious learning and intelligence subjected to the distress of lengthy imprisonment without bail, and being, as he explained subsequently to the Court, essentially without friends to support him in his present incarcerated circumstances, as well as any actively supportive relatives, and without apparent financial means, most of the content of those affidavits could not be categorised as admissible evidence, except in some instances by way of admissions damaging to the defence of the case for contempt. The material is largely an attempted, but radically misconceived, and at times defiant, explanation of his conduct complained of by ACCC. That affidavit material reveals nevertheless a person submerged by the distress of his life's deteriorated circumstances, yet defiant in justification of his cause (or causes) of selling contraceptives to what he described as an 'overcrowded world'. It is not suggested that Mr Hughes' defiance was in any way or to any extent soundly based, or otherwise defensible.

Mr Hughes' oral testimony and submissions to the Court 21 The second day of the hearing was largely occupied by Mr Hughes' oral testimony, including his cross-examination, and by his subsequent submissions advanced orally to the Court. That testimony, including his cross-examination, which was given from the witness box under oath, evolved into a process, in part of critical self analysis of a life deficient in felicitous family and other emotional relationships, and in part of a life in reality divorced of appropriate achievements, despite his impressive tertiary qualifications. He spoke in response to my questioning of two unsuccessful marriages (apparently childless), and his virtual estrangement from his only brother, who is professionally successful and lives in Perth, and his entire estrangement from his only sister. Mr Hughes sought to rationalise, though not to my mind by way of satisfactory or persuasive explanation of his breaches of the Court's orders, convincingly, his altruistic motivations in providing contraceptive pills to women, and his concerns in relation to the plight of women in third world countries. He appeared to concede in any event that he had evaded the orders of this Court in the light of what he supposedly thought to be loopholes existing in the orders made by Allsop J, by supplying oral contraceptive pills to United States Australian residents. 22 Ultimately Mr Hughes' evidence embarked into themes of remiss and regret, and then into expressing resolution and the giving of undertakings, in the context of discussion of Order 5 of Allsop J (see [2] above): When I was before Allsop J I was in custody, on remand, but in my heart of hearts I wanted to continue with 'CrowdedPlanet'. I felt it was a very viable business idea. I still feel that with a shrewder or more disciplined businessman than what I am, somebody could build it into a $50 million a year business. However I don't feel that now. I feel that whatever spirit or spine that I might have had then has been squashed. I think I've had enough of contraceptives and promoting family planning. I feel I did my best and it didn't amount to very much and that I don't think I'll be doing any more in any shape or form in relation to family planning but be that as it may I will, as Mr Williams has reservations about me, perhaps with reason, if I'm involved with a website selling contraceptives in any shape or form, if I'm in control of it in a personal or a business name or a company sense I will comply with those orders and post those orders on the website. I would be very grateful if the no less than 20 point order is altered but even if it's not altered I will comply with it… I will, if I have anything to do with the Family Planning website in the future, I will post the notices as ordered.' He claimed that he would hereafter observe the terms of the declarations as well as of the orders. 23 Specifically as to Order 6 of Allsop J (see [2] above), Mr Hughes said '… I will not make life worse for myself to say that… I will, if I have anything to do with the Family Planning website in the future, I will post the notices as aforesaid'. Thereafter he added, I think it is correct to observe remorsefully (inter alia) 'And so, all the money, all the time, all those hours and hours of driving backwards and forwards across the Hay Plains have amounted to nought. So I am not going to try and do good anymore. I am just going to… when I finally get out of prison I am going to struggle to find some sort of part-time or full time job'. Mr Hughes reference to doing 'good' was to my understanding to his claimed altruistic objectives of making money by selling contraceptives to a wealthy American clientele in order to supply contraceptives at no cost to women in impoverished third world countries. 24 After giving the foregoing understandings and assurances in his evidence in chief (he was of course self-represented), Mr Hughes was precisely, firmly but fairly cross-examined by Mr Williams SC over some considerable time, taking up about 30 pages of transcript. It is I think sufficient to summarise that Mr Hughes conceded in substance, in the course of his cross-examination, or virtually so, his disobedience to and infringement of the orders of this Court, albeit that he tended to do so in protracted and sometimes convoluted detail. Mr Hughes' acceptance of his infringements of the Orders of the Court included reference to the orders of Tamberlin J as well as those of Allsop J, in the former case at least until the latter orders took effect. In circumstances where Mr Hughes could not recall previous statements of fact or intention on his part, to which his attention was drawn, Mr Hughes readily accepted the cross-examiner's assertion as to the contexts and the texts of such statements. 25 Mr Hughes additionally testified, in the course of his cross-examination, that the website he started, or restarted after the making of the orders of Allsop J, came about because as 'I've explained earlier why it was essentially set up [that is] as a means of refunding product or money to people I had charged more than 12 months before'. He insisted that he did not do so 'to circumvent Allsop J's orders', but rather that he 'was trying to raise enough money that I could refund those customers who asked for a credit on their credit cards… [b]y selling a couple of additional packs of oral contraceptives which I did'. That explanation was not however convincing, or at least substantially so. Mr Hughes admitted that it had always been his belief that the orders made by Allsop J were 'illegal', and he had previously asserted his belief (indeed by his eighth affidavit filed in the proceedings) '… in a philosophy that says law-abiding citizens can and must disobey illegal laws'.

Mr Hughes submissions in final address 26 Mr Hughes stated his age to be 56 years of age. He could not be described as having a healthy or robust appearance. As I have already indicated, he is virtually bereft of family support. His close friends are said to reside in Wollongong, where he intends to live after his release from gaol. His evidence is that he has no financial means, and is likely to be entirely dependent on social security on his release. The inferences I would draw is that that aspect of his testimony was accurate. All this points of course to a distressful culmination to wasted years, in that he has a bachelor of science in chemistry from Melbourne University, and three unfinished master of sciences courses, one in oceanography, one through South Hampton (United Kingdom), and one through Sydney University; he has a post graduate diploma in demography. 27 Notwithstanding some inaccuracies and perhaps exaggerations, Mr Hughes delivered his submissions in my opinion with appropriate humility and respect to the Court and to Mr Williams SC. One of his closing admissions was that 'I have not performed my responsibility to the norms of civil disobedience in a civilised western society', and further that he had adopted 'a disrespectful attitude to authority, in a vein of civil disobedience'. In closing address, he was complimentary of the professionalism and efficiency of ACCC and its legal representatives. He undertook to 'co-operate fully with the ACCC as regards to domain names, the transfer of domain names to the ACCC and the postings of warnings on whatever relevant domains and domain names that they choose…'. 28 A character reference concerning Mr Hughes provided by Associate Professor Audrey Wilson of the Department of Chemistry of the University of Wollongong (bearing date 15 December 2003) was in the following terms: 'I have known David Hughes for over 13 years since the days when he ran a successful small engineering business. This work utilized his university degree qualifications, his advanced and sophisticated knowledge of Nb/Fe/B magnet technology and his well-developed creativity. David manufactured and sold a quality item in these strong magnets used in such items as mining machinery. This project brought desirable overseas sales for Australia. David's partner of many years standing, an accountant, was also the financial adviser for the business until she was diagnosed with melanoma. David received no government assistance although he was contributing to Australian exports through his small business venture. This plus competition from China where his product was copied and produced more cheaply and the break-up of his relationship have been sources of increasing stress. Attempts to persuade David of the advisability of countering a mild chemical imbalance using medication have never been very successful resulting in some irrational and unfortunate behaviour when in a manic phase. David rightly feels that such medications seriously interfere with his creativity. Over the years David has been motivated by caring for others and by a deep concern for the planet and its inhabitants. His involvement in birth control was never a moneymaking exercise but rather a means of assisting third-world over population and the production of a healthy environment for those already on the planet. These concerns have also taken him to investigate wind power and to establish test sites. He was also very active in solar energy concerns and in the production of solar powered cars and boats. In all David has much to commend him and is an honourable and caring individual who's mind, untreated bipolarity occasionally cases him to over-react to what he sees as unfair treatment if it will ultimately affect his projects.'

ACCC submissions on penalty 29 Senior counsel for ACCC emphasised the theme that 'securing compliance is a paramount objective', and that nevertheless, '[t]here is a punitive element and there is also an element of securing compliance with future orders'. I was reminded that the conduct complained of involved not merely an element of monetary gain to Mr Hughes, but also matters bearing upon public health, in that oral contraceptives may not normally be sold, otherwise than by a doctor's prescription, whether in Australia or in the United States. 30 I was referred to a number of precedents of sanctions imposed for breach of court orders made in the context of litigation of the nature here involved. It is of some assistance to summarise those judicial precedents. (i) ACCC v Australian Taxation Information Services Pty Ltd and Ivanoff (BC 9907613), being a decision of Dowsett J given on 11 November 1999, involving contempt of two earlier orders of the Court made by consent to the effect that the corporate respondent to those proceedings circulate letters to persons, to whom it had sent GST registration forms in circumstances constituting misleading and deceptive information concerning the corporate respondent's connection with the Australian Taxation Office, being letters declaring inter alia the availability of refunds from that respondent to such persons; the corporate respondent in that case was also fined $5000, and its controlling director was committed to the Melbourne Assessment Prison for three months; (ii) ACCC v Goldstar Corporation Pty Ltd and Hudson (BC 9902357), being a decision of Kiefel J given on 7 May 1999, involving the imposition of a fine of $30,000 on the company and a prison sentence of six months upon that company's controlling director; those orders of the Court were made in the context of an earlier term of imprisonment ordered of Drummond J, which was stayed or suspended to enable the offender to attend to compliance requirements, something which did not happen; (iii) ACCC v White (BC 9803302), whereby Drummond J of this Court ordered on 16 July 1998 that the respondent be committed to prison for two months for deliberate non-compliance with orders for his personal examination and for the supply of documents, after obtaining an initial reprieve from punishment so as to comply with the order as to production of documents; (iv) Deputy Commissioner of Taxation v Zhu (BC 9604214), whereby Beach J of the Victorian Supreme Court ordered on 9 September 1996 that the defendant be imprisoned until 31 October 1996 for contempt of its Court's order to refrain from disposing of certain realty in its context of a substantial income tax indebtedness; (v) ACCC v Info4pc.Com Pty Ltd & Anor (2002) 121 FCR 24, whereby RD Nicholson J of this Court ordered on 31 July 2002 that a company be fined, in relation to one incident of contempt $2000, which was for a very short period of time, and $8000 (and its director $4000) for a more serious incident of contempt of restraining orders as to not withdrawing funds above a certain limit, and subject to limitations as to purposes of withdrawals and for interim periods of time; (vi) Yang (2002) 132 A Crim R 438, whereby Buddin J imposed a prison sentence of nine months, with a non-parole period of two months, in circumstances where a real estate agent with a serious gambling addiction, whose license had been cancelled, breached undertakings given to the Supreme Court of New South Wales not to carry on business purportedly as a real estate agent; (vii) Australian Securities and Investments Commission v Matthews (1999) 32 ACSR 404, whereby Sackville J imposed a suspended sentence of two months, susceptible to crystallisation at any time within the ensuing period of twelve months, in relation to systematic published commercial advice about securities on an internet website; in arriving at that conclusion his Honour found that the respondent '… appreciated full well that, if the site were not suspended, there was a grave risk that he would be in breach of the orders by reason of reports about securities being published on its site',and yet further that the respondent '… is not genuinely contrite about his conduct… he considers that he did nothing wrong… despite his plea of guilty, he still does not appreciate or acknowledge the seriousness of his actions'. His Honour took the view nevertheless that although any contempt is serious, there were three mitigating factors, one being that the respondent pleaded guilty, yet had demonstrated a lack of contrition. His Honour emphasised at [30], as did Carr J in Deputy Commissioner of Taxation v Hickey (1999) FCA 529 at [34], that although any contempt of the Court is serious 'imprisonment is a measure of last resort'. 31 Apart from the specific authorities above cited, sentencing principles for breach of an order or undertaking have of course been discussed in numerous authorities. The leading authorities are conveniently summarised by Tamberlin J in the earlier Hughes litigation (that is, in [15]-[20] of (2001) ATPR 41-807 at 42,781-3). I am required of course to bear those principles in mind, in the context of formulating my conclusion below.

My conclusions, including conclusions on penalty: 32 Senior counsel for ACCC, Mr Williams SC, rightly submitted that in the light of Mr Hughes' evidence given at the hearing, it was not in contest that Mr Hughes breached each of the orders in the way and to the extent alleged by ACCC as set out in the Amended Statement of Charge (see [3] and [4] above), Mr Hughes having substantially admitted and not contested those breaches. Even without the admissions and concessions proffered by Mr Hughes, the ACCC's case was positively established in all material respects, and if I might say so, obviously at very considerable cost. Mr Williams SC further submitted that Mr Hughes is not presently imprisoned 'in the technical sense', in that bail has been refused in the South Australian Magistrate's Court, and for that reason he is presently in custody in Adelaide, and that therefore Mr Hughes 'would commence to serve the term forthwith upon your Honour's order'. Mr Williams SC did not dispute that Mr Hughes had expressed contrition in the context of the present proceedings, but asserted that he had similarly behaved by the time of the conclusion of the proceedings before Allsop J, when to use Mr Williams' description, he was 'half way through, I think, a one year sentence' for an unrelated offence. Mr Williams emphasised, in my opinion correctly, that although Mr Hughes has no apparent means, nevertheless he has the ability to acquire a computer, to set up a website, and commence to make offers to sell contraceptive pills, which would not be a costly venture. So much, he asserted, would be a repetition of the conduct which Mr Hughes set about within a month or so of the making of Allsop J's orders. Moreover as he further rightly emphasised, the implications of selling contraceptive pills, in the absence of doctors' prescriptions, involve inherently serious public health issues. Mr Williams SC stressed that in the light of the litigation history, Mr Hughes 'is a person who is simply not to be accepted on his oath in these matters', and that consequently very serious matters of public interest were here at stake. 33 Senior counsel for ACCC therefore submitted that 'objective features, without taking subjective mitigated factors into account, would indicate a range of 6 to 18 months in the Commission's submission', in order to satisfy the punitive element and also the element of securing compliance with future orders. Only that course would indicate to Mr Hughes that 'continuing breaches will lead to a steadily escalating range of sanctions until Mr Hughes eventually complies with the orders', even if the Court was to take the view that a partly suspended substantial sentence would be the appropriate vindication. 34 Despite the considerable force in the submissions reasonably and carefully framed for the Court's consideration on behalf of the ACCC, I think that there are countervailing factors which I should take into account. I am conscious of the susceptibility of a judicial officer to be beguiled by an offending party's confessions of guilt in a context of susceptibility to significant prison sentences. However, re-offending conduct following upon a history of one custodial sentence (ie that of two weeks' imprisonment by order of Tamberlin J in the circumstances described in [8] above) does not necessarily mean an inherent likelihood of re-offending for the same misconduct. The present circumstances involve of course the imponderable circumstance of Mr Hughes' present incarceration pending a trial for a criminal offence involving assault for which, I infer nevertheless, he presently intends to dispute. Any custodial sentence of imprisonment imposed by this Court would presumably take precedence over any concurrent sentence imposed by a State Court. 35 Having given the matter much thought, I do not think it would be appropriate to impose a custodial sentence of the dimension propounded by ACCC, whether on a suspended or partially suspended basis, or otherwise. Whilst wholly taking into account the submissions of ACCC as to the gravity of the contempt, and Mr Hughes' history of a prior adverse finding as to prior contempt for which he received a custodial sentence of two weeks, and whilst readily accepting that a judicial officer can be deceived as to the sincerity of assurances proffered by an offender as to future conduct, and further accepting the relative ease in a technical sense by which Mr Hughes could offend again, I was not unimpressed by Mr Hughes' measure of candour to the Court, his co-operation and politeness in the course of a three day hearing, and the somewhat tragic and distressing family and economic circumstances which have befallen him, albeit largely of his own making, at the time in life when people of his academic qualifications would be looking to shortly pending years of retirement and relative physical inactivity. 36 There can be little doubt that Mr Hughes' present circumstances bear the hallmarks of personal tragedy and distress. He no longer appears to enjoy any support or affection from his next-of-kin, and realistically has no prospects of exploiting in any dignified way his not unimpressive tertiary qualifications. He appears to be bereft of any apparent financial means or assets. Of course I can place no weight, one way or another, on his dismissive description of the physical offences for which he is presently, and has been in the past, incarcerated, but the reality of this man, to my perception and observation, is that of someone not only unstable in personality but becoming susceptible to physical frailty. He is largely conscious of having wasted his academic qualifications, and is wholly conscious of his rejection by his next of kin. Nevertheless, as was observed by Tamberlin J in the course of the earlier contempt proceedings, his motivations for the kind of conduct then complained of were not bereft of a sense of altruism, however misconceived. 37 Despite the unfortunate circumstances to which I have referred, it is readily apparent that although a custodial sentence must be imposed in order to demonstrate the implications of substantial disobedience and defiance of a court's orders, it would not be appropriate in all the complexity of circumstances to impose a range of custodial sentences of the dimension sought by ACCC. I must of course put aside the circumstance that Mr Hughes has now been imprisoned without bail for a relatively long time. Whether or not he might be sentenced to further imprisonment in relation to the pending assault charges can only be a matter for present speculation. 38 The appropriate course in my opinion, in all the circumstances of this unfortunate affair, is that Mr Hughes be imprisoned for a period of six months computed from this date, upon the basis that so long as he complies with Orders 5 and 6 of Allsop J to the extent extracted in [2] above, the warrant for his imprisonment will not be executed or capable of execution beyond an initial period of two months. I should add that since the respondent is presently incarcerated for a reason unrelated to the matters the subject of these proceedings, it should not be taken to constitute contempt if the respondent is unable to effect compliance with order 4 above, so long as he promptly signs such documents and attends to such other matters as may be reasonably required by the Commission, and as may be presented to him for signature or other form of authorisation, to enable such transfer of registration of the domain to be effected, to the extent that such registration may still subsist or have effect. I certify that the preceding thirty-eight (38) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Conti.

Solicitor for the Applicant: Australian Government Solicitor

Date of Hearing: 5, 6 and 7 April 2004

Federal Court Act 1976(Cth)

Trade Practices Act 1974(Cth)ss 52, 86C

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