Australian Competition & Consumer Commission v Purple Harmony Plates Pty Limited

REASONS FOR JUDGMENT 1 The applicant ("the Commission") has filed a motion seeking declarations that the respondents have been guilty of contempt of court and seeking orders against the respondents, including the imposition of fines, on the basis that the respondents have failed to comply with the order made by the Court on 6 August 2001. On 6 August 2001, I published my reasons for judgment in the proceeding, finding that the first respondent, Purple Harmony Plates Pty Limited, had contravened s 52 of the Trade Practices Act 1976 (Cth) ("the Act") by making misleading or deceptive representations, or representations which were likely to mislead or deceive, in relation to certain products which it offered for sale (ACCC v Purple Harmony Plates Pty Limited [2001] FCA 1062). I also found that the second respondent ("Mr Lyster") and the third respondent ("Ms Glover") were involved in the contraventions of the Act by the first respondent. 2 On 6 August 2001, I made the following orders: "1. The first respondent be restrained, whether by itself, its servants or agents or any of them or otherwise howsoever, from publishing, distributing, transmitting, displaying or broadcasting material which contains representations: (a) in relation to the product known and described as the large Purple Harmony plate that: (i) the plate has an energy field of approximately 2.5 metres around it that negates the effects of the electrified and frequency toxic environment and treats the sub‑particles of electromagnetic and other frequencies, reducing the effect on human bodies, thereby lowering bodily stress and fatigue levels; (ii) placing the plate beneath a computer monitor counters the effects of Electromagnetic Radiation ('EMR') and reduces fatigue; (iii) the plate will negate the effects of re‑radiated and electromagnetic frequencies; (iv) the plate will clear and energise fruit and vegetables, restoring their natural vitality; (v) the plate will calm people, making them more receptive to treatment by health practitioners; (vi) the plate has a beneficial effect on health, accelerates healing and lessens or cures pain; (vii) the plate creates a positive energy field around it that is very beneficial to all life, plant, animal or human; (viii) the plate raises personal energy levels and protects against EMR in the environment and from EMR producing equipment, such as computers, televisions, mobile phones; (b) in relation to the product known and described as the small Purple Harmony plate that: (i) the plate has an energy field of approximately 50 centimetres around it that negates the effects of the electrified and frequency toxic environment and treats the sub-particles of electromagnetic and other frequencies, reducing the effect on human bodies, thereby lowering bodily stress and fatigue levels; (ii) the plate will negate the effects of re-radiated and electromagnetic frequencies; (iii) the plate has a beneficial effect on health, accelerates healing and lessens or cures pain; (iv) the plate creates a positive energy field around it that is very beneficial to all life, plant, animal or human; (v) the plate raises personal energy levels and protects against EMR in the environment and from EMR producing equipment, such as computers, televisions, mobile phones; (c) in relation to the product known and described as the Purple Harmony disk that: (i) wearing the purple harmony disk over the thymus gland directly helps to strengthen the immune system; (ii) the disk enables the human body to cope better with the electrified and toxic environment; (iii) the disk will increase a person's general health; (iv) the disk will cause aches, pains, niggly coughs and colds to be less severe; (v) the disk can be used to treat cuts, burns, aches and pains, water, foods and all the things that Purple Harmony plates can be used for; (vi) the disk reduces the effects of harmful electromagnetic and other frequencies on human bodies; (vii) the disk will decrease stress levels on the human body and strengthen the immune system; (viii) the disk will negate the effects of re-radiated and electromagnetic frequencies; (d) in relation to the product known and described as the Purple Harmony angel that: (i) the angel will strengthen the immune system; (ii) the angel can be used to treat cuts, burns, aches and pains, water, goods and all the things that Purple Harmony plates can be used for; (e) in relation to the product known and described as the Purple Harmony mobile phone disk that placing a mobile phone disk to the area nearest to the antenna will reduce all uncomfortable sensations from using a mobile phone, such as 'hot spots', jaw and/or teeth problems, headaches and/or earaches, tinnitus or nausea; (f) in relation to the product known and described as the Purple Harmony green thumb that: (i) holding one or two green thumbs for twenty minutes a day will energise your body system; (ii) the green thumb will re-oxygenate water, giving it more life force energy to benefit all living organisms; (iii) use of the green thumb will result in plants growing with vim and vigour; (iv) by placing the green thumbs in a bucket or jug of water, the green thumbs will treat water, whereby the water will taste, smell and feel, and be so much better for the user; (v) attaching three green thumbs to any power cord will treat the electromagnetic frequencies emanating from gadgets and result in reduced stress levels; (g) that the product known and described as the fuel ionizer system: (i) ionizes the fuel cars use; (ii) creates more power from complete burning of fuel; (iii) produces cleaner engines and injectors; (iv) reduces emissions; (v) gives better mileage and reduces fuel consumption; (vi) enables quicker starting of engines; (vii) will lead to less shifting of gears with heavy loads; (viii) produces useable energy; (h) that the products known and described as the Hunza water ionizer system/Hunza living-energy water system - gold Hunza and blue Hunza products: (i) re-oxygenate water; (ii) energise water; (iii) improve water quality; (iv) free water of odour and chlorine; and that the Blue Hunza will last indefinitely; (i) that the product known and described as the Hunza swimming pool ionizer: (i) has similar beneficial effects to the Hunza water ionizer, however, it is much more powerful; (ii) reduces the use of chemicals required to maintain correct pool pH; (iii) decreases the effect of those chemicals on hair, skin and eyes; (j) that the product known and described as the Purple Harmony fridge freshener: (i) lowers the refrigerator temperature; (ii) makes food last between two to four times longer than usual; (iii) removes odours; (iv) reduces energy costs; (v) reduces the running costs of a refrigerator; (vi) saves energy; (vii) is a long lasting product; (viii) eliminates the effects of EMR from computers; (ix) reduces stress and fatigue; 2. The second and third respondents be restrained from being in any way directly or indirectly, knowingly concerned in, or party to, publishing, distributing, transmitting, displaying or broadcasting material containing any of the representations referred to in paragraph 1 of this order. 3. The respondents, within fourteen days of the date of this order, at their own expense, send or cause to be sent by mail a letter to all customers who have purchased any of the products from the first respondent in the form set out in Schedule A to this order. 4. The respondents, within fourteen days of the date of this order, place on the Internet website at '', and maintain for a period of three months thereafter, an automatically generated active pop-up window or message box that complies with the contents, requirements and format described in Schedule B to this order. 5. The first respondent refund in full on request by a customer all monies paid by customers for the supply or possible supply of the products. 6. The respondents file and serve on the applicant by 31 August 2001 an affidavit verifying that they have carried out their obligations under pars 3 and 4 of this order. 7. The respondents pay the applicant's costs of the application and the applicant's costs of giving notice under s 78B of the Judiciary Act 1903 (Cth)." ("the order"). 3 A copy of the order was served on each of the first respondent and Mr Lyster on 10 August 2001 and on Ms Glover on 11 and 15 August 2001. Each copy order served contained an endorsement in the following terms: "NOTICE TO PURPLE HARMONY PLATES PTY LTD, NEIL ARTHUR LYSTER AND HELEN THERESE GLOVER: Failure to comply with this Order may constitute contempt of Court and may render you liable to imprisonment or the imposition of a fine, or in the case of a corporation an order for sequestion [sic] or a fine may be imposed, if: (a) where the Order requires you to do an act within a specified time, you refuse or neglect to do the act within that time; or (b) where the Order requires you to abstain from doing an act, you disobey the Order." 4 The respondents have failed to comply with the order. In particular, the first respondent has continued to make representations substantially to the same effect as those set out in par 1 of the order ("the representations"), the respondents have failed to send the letter to customers referred to in par 3 of the order, they have failed to place and maintain an automatically generated active pop‑up window or message box on the Internet website at ("the website") in accordance with par 4 of the order and they have failed to file and serve an affidavit verifying that they have carried out their obligations under pars 3 and 4 of the order. 5 The Commission led evidence that on 22 August, 4 September, 24 September and 5 October 2001 access to the website by officers of the Commission showed that representations were being made on the website in contravention of par 1 the order. On 24 September 2001, an officer of the Commission accessed the website and noticed that a link to a new Internet website at had been added. A comparison of the two websites showed that the contents of each website was identical and that representations in contravention of par 1 of the order were being displayed on both websites. 6 All Internet websites have a unique Internet Protocol numerical address, which can be determined by using a particular computer software program to conduct what is known as a reverse domain name search lookup inquiry. A reverse domain name search lookup enquiry on 24 September 2001 revealed that both websites had the same Internet Protocol numerical address of 64.177.89.55. 7 On 27 November 2001, access by an officer of the Commission to each of the websites disclosed that the contents of the websites (including the representations which had previously been made in contravention of par 1 of the order) had been removed, except for the statement "Purple Harmony Plates International - Due to circumstances beyond our control this site will be closed until further notice." On 30 November 2001, a search conducted by an officer of the Commission in respect of the two websites showed that the front pages of both websites were last modified on 24 October 2001. 8 The results of these searches led the Commission to conclude that the two websites originated from the same server, were located at the same static unique Internet Protocol address and used the same files in the creation of their content. It followed that the two websites were, in effect, the same website, but were accessible via two different domain names. The Commission submitted that, rather than complying with the order and removing the representations from the website, the respondents established a second website, using another domain name, on which they published and broadcast representations which were substantially the same as the representations. 9 At the hearing of the contempt application, the Commission referred to the places where the representations appeared in a printout of the website's contents on 22 August 2001 and a printout of the contents of the website at on 5 October 2001. Although the representations did not all appear in the websites' contents on those dates in the same form as set out in par 1 of the order, and some of the representations did not appear at all, I am satisfied that the majority of the representations referred to in par 1 of the order were repeated in the same, or substantially the same form, and were to the same effect. It follows that there has been a contempt of court by the first respondent by its continued publication and display of the representations on the websites in contravention of par 1 of the order. 10 Any failure to comply with a court order is serious. In the present case, as the first respondent continued to make the majority of the representations, the subject of the injunction in par 1 of the order, by their publication and display on the websites, the Commission has demonstrated that the first respondent's failure to comply with the order has been substantial. Although access to the websites on 27 November 2001 indicated that their contents had been removed, and accordingly on that date the respondents were not in breach of the order restraining them from making or authorising the making of the representations on the websites, that date was almost four months after the date on which the order was made and from which it was to take effect. 11 The Commission led evidence that access to the website on several dates from 22 August 2001 to 27 November 2001 showed that the respondents had failed to place on the website the automatically generated active pop‑up or message box containing the corrective statement described in Schedule B to the order. The Commission also submitted that the respondents had failed to send or cause to be sent by mail a corrective letter in the form set out in Schedule A to the order to all customers who had purchased any of the products. The Commission relied on the evidence of Monica Yvonne Cutmore who said that although she had purchased a Purple Harmony Disk and a Purple Harmony Angel via the website in or about June 2000, she had not received any communication from the respondents in compliance with par 3 of the order. The respondents did not submit that they had sent any letters to any customers in the form of Schedule A to the order. The Commission also demonstrated that, as at the date of the hearing of the motion, the respondents had failed to file and serve an affidavit verifying their compliance with pars 3 and 4 of the order as required by par 6 of the order. 12 I am satisfied on the evidence led by the Commission that Mr Lyster continued to be the administrative contact for the domain name and that Mr Lyster and Ms Glover continued to be the directors of, and shareholders in, the company up to and including 27 November 2001. The Commission led evidence that the registrant, administrative and technical contact for the domain name was Mr Lyster. The evidence led by the Commission also disclosed that the contents of the website, which was downloaded and printed out on 5 October 2001, contained the following statement by Mr Lyster as President/CEO of Purple Harmony Plates Inc: "The founding principle of Purple Harmony Plates is to promote and distribute, at a price that all can afford, the products of Energy Innovation Products and any other new-age product that has proven to be of help to the public. The prime purpose is to offer as many people as possible the help that is so urgently needed in today's changing world." The Commission submitted that this was further evidence of the involvement of Mr Lyster in publishing and displaying the representations in contravention of par 1 of the order. The Commission noted that Ms Glover swore an affidavit on 21 November 2001 in which she stated that she was a director and shareholder of the first respondent and that she made the affidavit on behalf of the first respondent, herself and Mr Lyster. 13 I am therefore satisfied that Mr Lyster and Ms Glover have been directly or indirectly knowingly concerned in and party to the publication and display of the representations in contravention of par 1 of the order to which I have referred earlier in these reasons and that, accordingly, each of them has contravened par 2 of the order as well as pars 3, 4 and 6 of the order. 14 The respondents did not challenge the evidence led by the Commission as to their failure to comply with the order, nor did the personal respondents challenge the submission that it was within their power to comply with the order. Although the order was not the subject of an appeal, the respondents relied upon a number of Acts of the English Parliament going back to the Magna Carta of 1297 and a number of biblical references in support of their submissions, which included the following: · the order was unconstitutional, null and void and an act of treason; · the order contravened the laws, customs and constitution of the Commonwealth because it purported to deprive the respondents of their livelihood and their means of production without due process of law; · the laws of god and the natural law prohibited a court of law depriving a person of his or her livelihood or means of production; · by the order, the Federal Court committed an act of war against the Commonwealth. The respondents submitted that my judgment dispensed with Article 29 of the Magna Carta of 1297 and Article 12 of the Bill of Rights of 1688 and it was an act of treason for a judge to commit an act of war against a statute by dispensing with that statute; · the Court was not competent to hear and determine the charges made by the Commission as the Crown and Government of the Commonwealth had abdicated government and had been stripped of all legislative, executive and judicial powers by operation of law; · the respondents had seceded from the assumed or usurped jurisdiction of the defunct Government of the Commonwealth of Australia; · the Commission's notice of motion and statements of charge petitioned the Court to commit further contraventions of the laws, customs and constitution of the Commonwealth and further acts of war against the Commonwealth. 15 There is no substance in any of these submissions. The arguments raised by the respondents were substantially addressed in my earlier reasons for judgment in which I concluded that each of the respondents was amenable to the jurisdiction of the Court in any matter arising under the Act pursuant to s 86 of the Act: ACCC v Purple Harmony Plates Pty Limited (supra) at [23] to [30]. Rather than seeking to address their failure to comply with the order, the respondents maintained that the order was null and void and they challenged the Court's jurisdiction to hear and determine the contempt charges. Pursuant to s 5(2) of the Federal Court of Australia Act 1976 (Cth), the Federal Court of Australia is a superior court of record and an order of a superior court made erroneously or in excess of jurisdiction is merely voidable and remains valid and enforceable until set aside: Cameron v Cole (1944) 68 CLR 571; Re Wakim; Ex parte McNally (1999) 198 CLR 511; Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 620; Matthews v Australian Securities & Investments Commission (2000) 97 FCR 396 at 401; Australia and New Zealand Banking Group Ltd v Merribee Pastoral Industries Pty Ltd (1998) 84 FCR 367 at 380. The respondents did not appeal from the order which therefore remains valid and enforceable. 16 The Court's power to punish for contempt of court is well established. Section 31 of the Federal Court of Australia Act gives the Court the same power to punish for contempt of court as the High Court has under s 24 of the Judiciary Act 1903 (Cth). The High Court has the same power to punish for contempt as was possessed by the Supreme Court of Judicature in England at the commencement of the Judiciary Act in 1903. 17 A finding of contempt should not be made where the order is ambiguous, unclear or lacks precision. The order should specify with certainty the result to be achieved. The standard of proof for both civil and criminal contempt is that all charges of contempt must be proved beyond reasonable doubt: Witham v Holloway (1995) 183 CLR 525 at 534; Australian Securities & Investments Commission v Matthews [1999] FCA 803 at [22]. Any contempt of court is serious as it involves interference with the effective administration of justice by impeding and perverting its course and diminishing the authority of the Court: Deputy Commissioner of Taxation v Hickey [1999] FCA 259 at [35]. The Court's power to punish for contempt is both necessary to enforce the Court's orders for the benefit of the applicant and to uphold and protect the effective administration of justice by demonstrating that the Court's orders will be enforced: Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 107. Accordingly, there is a public interest in the exercise of the contempt power. 18 I am satisfied that the terms of the order made on 6 August 2001 are clear and unambiguous and that the order does not lack precision. The order restrains the first respondent from publishing or displaying material containing the representations and restrains Mr Lyster and Ms Glover from being directly or indirectly knowingly concerned in, or party to such publication or display. The order requires the respondents to place a corrective statement on the website at , to send corrective letters to the company's customers, and to file and serve on the Commission by 31 August 2001 an affidavit verifying that they have carried out their obligations in relation to the corrective material. I am satisfied beyond reasonable doubt that the breaches of the order alleged in each of the statements of charge against the respondents have been made out. The failure of each of the respondents to comply with the order has not been merely casual, accidental or unintentional. Rather, I consider that there has been a deliberate failure or refusal by the respondents to attach the necessary degree of importance to an order of this Court. This is shown in particular by the evidence that a link to a second website displaying the offending representations was established after the date upon which the order was made. This evidence, together with the evidence that the websites were last modified on 24 October 2001 and that the contents had been removed and replaced with the statement "Purple Harmony Plates International - Due to circumstances beyond our control this site will be closed until further notice" indicates that the respondents had access to the technology and the ability to modify each website's contents in compliance with the order prior to 24 October 2001. 19 Although the respondents were not represented by legal counsel, they appeared in person at the hearing and were present in court when I published my reasons for judgment on 6 August 2001 and made the order. I am satisfied beyond reasonable doubt that the order was served on each of the respondents. Further, the Commission's notice of motion alleging contempt of court was initially made returnable on 24 October 2001, on which date the respondents were represented by a solicitor and the serious nature of the allegations was raised with the solicitor. Although they were informed as to the serious consequences of a failure to comply with a court order, there is no evidence that the respondents made any effort to give effect to, or comply with, the order. At the hearing of the contempt proceeding, the respondents did not seek to argue or produce any evidence that they had endeavoured to comply in any way with the order but, rather, maintained that the order was invalid and therefore could be disregarded. When determining whether a party has been guilty of contempt of court, it is immaterial if the party in breach of the order disputes the Court's judgment or genuinely believes that the order should not have been made: Official Trustee in Bankruptcy v Pastro [2001] FCA 234 at [12]-[14]. 20 Initially, the Commission sought an order for imprisonment of the personal respondents and for sequestration of the company's assets. However, at the hearing, the Commission abandoned seeking those orders and sought orders that: · the first respondent be fined $20,000; · the personal respondents each be fined $10,000; · the respondents deregister the domain names "" and " -harmony-plates.com" and be restrained from registering those domain names for a period of twelve months; · the respondents file and serve an affidavit verifying that they deregistered the domain names. 21 The applicants also sought an order for the further continuation of the injunctive relief granted on 6 August 2001. However, such an order is not necessary as the order made on 6 August 2001 is a continuing injunction, without any specified time limit, and is not limited to displaying the contravening representations on the website. Notwithstanding the orders I propose to make on the motion for contempt, the respondents are still obliged to observe and perform the terms of the order made on 6 August 2001. 22 The Court has a range of remedies available to it to ensure compliance with its orders: Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (supra) at 114‑115; Australian Securities & Investments Commission v Matthews (supra) at [29]; Reches Pty Ltd v Tadiran Limited [2001] FCA 1486 at [22]. The flexibility of the orders available to a court when seeking to ensure future compliance with its orders and to bring a contempt of court to an end was noted by the majority of the Court in Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (supra). The majority (Gibbs CJ, Mason, Wilson, Deane JJ) said at 115: "There are considerable powers, resort to which imposes a heavy responsibility upon a court confronted with a determined challenge to its authority. The propriety of their exercise cannot be measured solely by reference to the established procedures attending the prosecution of ordinary breaches of the law. Contempt of court is a distinctive offence attracting remedies which are sui generis: Morris v Crown Office [[1970] 2 QB 114 at 129]. It is required of the chosen remedy that it be effective, no more but no less. For, if it is not effective, serious and lasting damage to the fabric of the law may result." 23 The Court has power to impose a fine for contempt of court pursuant to s 23 of the Federal Court of Australia Act which enables the Court to make orders of such kinds as the Court thinks appropriate. The Court may impose a fine for civil contempt where the disobedience is wilful and not merely casual, accidental or unintentional: Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (supra) at 106‑113. In that case, the majority said at 113 that "a deliberate commission or omission which is in breach of an injunctive order or an undertaking will constitute such wilful disobedience unless it be casual, accidental or unintentional". 24 I am satisfied beyond reasonable doubt that there has been a contempt of court by the first respondent in its failure to comply with the order. I am also satisfied beyond reasonable doubt that the personal respondents have been involved in that contempt which has not been casual, accidental or unintentional. It has been deliberate and considered. In short, the order has been consciously ignored and disregarded by all respondents. The fines submitted by the Commission are appropriate as there has been a deliberate and wilful refusal and neglect to comply with the order. The respondents have not sought to excuse or explain their conduct other than by submissions in substance that they were not obliged to recognise or observe the authority or order of the Court. Those submissions were plainly untenable. 25 However, I am not satisfied that I should direct that the respondents deregister the two websites. The Commission submitted that such an order was necessary because the offending material could easily be reinstated on the websites at any time. The Commission said that as the respondents had failed to comply with the order, it was necessary to make a further order to prevent the continuation of their conduct in breach of the Act and that such an order would avoid the Commission being required to engage in a perpetual monitoring service of the websites. If such an order were made, anyone who sought access to either of the websites would be confronted with a statement that the website was no longer available. The Commission accepted that this was a novel order, but argued that it was analogous to traditional orders for closing down premises where illegal activity was being engaged in on those premises. The Commission submitted that the Court would have jurisdiction to make such an order pursuant to s 23 of the Federal Court of Australia Act. 26 The Court's power in relation to contempt should be exercised to ensure orders are complied with and to deter conduct in contravention of the Court's orders. I am satisfied that the fines sought by the Commission constitute a sufficient deterrent at this stage. The proceedings were issued by the Commission relying on the Act, the purpose of which is to protect consumers and not to punish contravenors. If the websites are deregistered, then the corrective statement would not appear on those websites and consumers would not be informed via the websites of the contents of that statement. I consider that it is necessary that the websites remain active so that the public can be notified of those matters. Although contravening representations were made on the websites subsequent to the order, they are no longer being made. The injunctions which I granted restraining the respondents from making the representations are continuing injunctions. If the respondents make representations, in contravention of the order, subsequent to the date of this judgment, for example by reinstating the material containing the offending representations on the websites, it would be open for the Commission to institute further proceedings for contempt. 27 The respondents should pay the Commission's costs of the application. I certify that the preceding twenty‑seven (27) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg.