Basetec Services Pty Ltd v Leighton Contractors Pty Ltd [2015] FCA 762 | Case summary

EX TEMPORE REASONS FOR JUDGMENT 1 The respondent in these proceedings (Leighton) has applied for injunctions restraining the applicant (Basetec) and its officers and employees from communicating with it and its parent company, CIMIC Group Limited, as well as their respective officers, employees and agents about these proceedings or their subject matter. 2 In addition, Leighton seeks injunctions restraining Basetec, its officers and employees from publishing to non-parties statements about the conduct of it and its legal representatives in the proceedings which are "calculated to intimidate, harass or otherwise bring improper pressure" on it in respect of the conduct of the proceedings or which is information communicated or provided in connection with attempts to mediate or negotiate a settlement of the proceedings. 3 Basetec carries on business in the field of environmental engineering. Its sole director, secretary and ultimate shareholder is Mr Charles Figallo. Although Leighton's application seeks restraints against each of Basetec, its officers and employees, Leighton has acknowledged that its evidence and submissions, if accepted, would warrant injunctions against Mr Figallo only. 4 In either November 2012 or February 2013, Basetec entered into a contract with Leighton pursuant to which it agreed to fabricate, supply and deliver glass reinforced pipeline for a project on which Leighton was then engaged. 5 The underlying proceedings arise out of that contract, and were commenced on 28 April 2014. In the proceedings, Basetec seeks relief from Leighton in respect of misleading or deceptive conduct and, or in the alternatively, unconscionable conduct which it alleges occurred both before and after its entry into the contract. 6 Leighton has filed a cross-claim against Basetec. It is not necessary for present purposes to outline the nature of the cross-claim. 7 The proceedings to date appear to have been marked by interlocutory activity concerning the pleadings which, as I understand it, have only just been finalised. They are in the docket of Besanko J, but the present application has been referred for hearing by another judge because the evidence relating to it includes evidence of some of the parties' settlement negotiations in respect of which it was considered that the trial judge should not be informed. 8 A mediation concerning the subject matter of the action took place on 23 March 2015 and a mediation agreement was signed that day. However, Basetec is not a party to the mediation agreement. Apart from those on the Leighton side and the mediator, the parties were instead Mr Figallo, his son Paul Figallo, and an in-house solicitor employed by Basetec. It was not suggested that anything turned on the identification of the parties to the mediation agreement for the purposes of the present application. 9 By cl 5.1 of the Mediation Agreement, the mediator and the parties agreed "to keep confidential all information and documents concerning the dispute which [were] disclosed during the course of the mediation". Further, the parties agreed that "any disclosures, exchanges, and all aspects of any communication occurring within the mediation [would] be without prejudice". 10 In general terms, Leighton seeks the injunctions to restrain Mr Figallo from engaging in two kinds of actions: first, placing improper pressure on it to settle the action, by communicating threats to publish material disparaging the conduct of Leighton and its officers, employees and agents in the proceedings, and by making personal threats to individuals employed by it; and, secondly, from disseminating information communicated in the course of the mediation or on a without prejudice basis or otherwise in connection with attempts to settle the proceedings. 11 In relation to the second of these matters, Leighton's evidence indicates Mr Figallo has, in an email sent on 30 June 2015 to numerous persons, including politicians, members of the media, the Chief Justice of South Australia, public servants, persons in the building industry and others, included information provided at the mediation. 12 Leighton also relies in this respect on Mr Figallo's affidavit sworn in answer to the present interlocutory application. In that affidavit, Mr Figallo discloses matters conveyed in the mediation and/or in later settlement discussions, and annexes a copy of Basetec's position paper in the mediation. That document stated on its face that it had been prepared "solely for the purpose of the mediation" and had been provided "strictly on a confidential and without prejudice basis". 13 Leighton contends that these disclosures were in disregard of the obligations accepted by Mr Figallo under the mediation agreement and those imposed by the general law. It is on that basis that it seeks an injunction to restrain any further disclosure by Mr Figallo of information or other matters communicated in the course of the mediation or settlement negotiations. Mr Figallo accepts the merit of Leighton's application on this topic, and has proffered to the Court an undertaking in the same terms as the injunction sought by Leighton. I will return to the way in which account should be taken of that undertaking. 14 The remaining applications by Leighton cannot be disposed of so readily, and it is necessary to give some background to them. 15 Leighton contends that emails, text messages and voicemail messages by Mr Figallo since 16 October 2014 include personal threats to Mr Kirkwood, its Executive General Manager - Construction West. 16 It is convenient to say at the outset that I would not construe the communications on which Leighton relies for this purpose as being personal threats to Mr Kirkwood, but instead as threats directed to Leighton more generally. Nevertheless, there is a basis upon which Mr Kirkwood could have understood them as personal threats, and it is to Mr Figallo's credit that he has acknowledged that that is so. 17 Leighton contends that Mr Figallo's emails, text messages and voicemail messages constitute a contempt of Court or, alternatively, indicate a basis upon which the Court may apprehend that conduct may occur in the future which will amount to a contempt of court. It contends, in particular, that the conduct constitutes an improper attempt by Mr Figallo to induce it to agree to a settlement of the action or, perhaps, to modify the way in which it defends the action. For this purpose, it relies upon the communications since 16 October 2014, but more particularly, on communications at the end of June 2015 and the beginning of July 2015. It is not necessary to refer to all the material upon which Leighton relies. I think that a sufficient flavour is gained from the following. 18 In an email on 27 October 2014 to Mr Macpherson, the principal solicitor acting for Leighton in the litigation, Mr Figallo said: I am going to fight your client through the media because you use the courts to your advantage and small to medium size businesses have no chance. And later: Now, Hamish, I'm only sending this email to you; however, if I do not hear from you within a week, it is going on the internet under freedom of speech. Now, to quote your client: 'Win or lose, we win'. Well, let me tell you, it will not happen this time, because even if you send us broke, your client is going to lose, as your client's reputation speaks for itself and that you cannot stop on the media. 19 Mr Figallo spoke in later emails, which it is unnecessary to recite now, of pursuing a campaign through the media against Leighton. Mr Figallo made good that threat by an email which he sent on 17 April 2015 to Mr Macpherson and copied to numerous other persons, including politicians and persons in the media, which included the following: From what I have been learning, your client is deliberately running small to medium size companies into debt and then using the court system totally to your advantage because your client has the power and the lawyers to do so. I now know exactly what your client does. They are totally deceitful, and we have to get our legislators to see this. No wonder so many directors of Leightons are being pursued by the Federal Police. So I now understand why your client, Leightons, is disposing of their name. 20 In an email on 21 April 2015 to Mr Macpherson, Mr Figallo included the following statement: Hamish, I want your client to know I am not going to fight your client's fight in court. I am going to fight my fight because I have come to learn your client is right. The court system is set up in their favour. 21 It seems that Leighton was prompted to bring the present application by some communications from Mr Figallo commencing on 30 June 2015. A voicemail from Mr Figallo to Mr Kirkwood on 30 June 2015 included the following: As you recall at our meeting, we tried to resolve our issues. I made it very clear to you if we do not resolve it, that I would be tackling this something different rather than our courts. I want you to know that has now started. I suggest you give me a phone call because all the media are on to me now and I intend to picket your place like mad and to expose the contracts that you keep winning as being such a labelled, corrupt company. John, I suggest you speak to me and resolve this [expletive] issue, OK because I tell you what John, whether I win or lose, as you quoted, your people quoted, "win or lose, you win". Let me tell you, the court case ain't the [expletive] end of it OK! Let me tell you that. The court case ain't the [expletive] end. OK, so I'm serious now, you hurt my [expletive] family and I will [expletive] condemn you and I mean it OK you understand that? I've never had to do this in my life but I'm taking advice of the judiciary and that is to [expletive] take the law into my own hands and I'm warning you, I'm coming after you and I want you to use this as much as you can because the media want this as well. OK, I'm warning you John. [Expletive] I'm after you. OK. 22 Next, in a voicemail message to Mr Kirkwood on 1 July Mr Figallo included the following: I just want you to know that when we had the last meeting at your office I told you the gloves were gonna be off. I meant what I said. I want you to understand that. OK. You can publish whatever you like. I'm happy to go to court but I'm going to bring your company down at all costs no matter what I do I'm going to expose it ... I gave you the opportunity of settling this several times. ... Let me tell you John at the end of the [expletive] day no matter what happens in court, I'm still gonna be chasing you for my money. OK. Understand that. You owe me money. ... OK, let's get it clear. I'm going to expose you to the extent that I can bring them down. ... You understand, I want you to publish this, I want you to get the police involved. You understand because only our media will understand what's going on and only the public and the taxpayers but when I read that story about that family that committed suicide in Western Australia because of you people, you deserve to be hanged up on a cross. And crucified, you understand that. 23 I have listened to both these voicemails. It is plain Mr Figallo uses forceful language in each. It is not unfair to describe each as amounting to a tirade or a rant. 24 There is evidence that Mr Figallo intends continuing communications of this kind. I refer in particular in this respect to an email he sent to his own solicitors on 4 July 2015, but curiously copied to Mr Macpherson, which included the following quote: If the judge wants to put a gag order on me, that's fine, but until then I will keep exposing them for who they really are. I mention that Mr Macpherson gave the applicant's solicitors the opportunity to claim legal professional privilege in relation to that communication but no claim has been made. 25 Leighton's contention is that by this series of communications Mr Figallo has evidenced an intention on his part to apply pressure to it by the use of the media and by threats. It contends that Mr Figallo's intention is to force an offer of settlement or a higher offer of settlement, as the case may be, from it in connection with the proceedings. 26 Mr Figallo has not in his affidavit denied this purpose. Instead he explains how the conduct of Leighton, as he perceives it, has led him to feel helpless and anxious. He has deposed that he believes it to be his duty to expose Leighton's conduct in relation to Basetec and in relation to other companies, and his duty to lobby governments to enact legislation to protect small and medium sized businesses from conduct of the kind which he attributes to Leighton. Mr Figallo says that he wishes to communicate to Leighton that he understands the tactics used by them. He acknowledges that when he started his email correspondence to Mr Macpherson on 16 October 2014 he wished to inform him of his intention to notify politicians and media of the tactics of Leighton which he (Mr Figallo) considers to be inappropriate. 27 Mr Figallo has deposed at [64] of his affidavit: I wanted Leighton to know that I was going to stand up against them and that I would do so no matter how much pressure they attempted to place on my company through costly litigation. I would not be intimidated or bullied, like David and Goliath. 28 Earlier in the affidavit Mr Figallo deposed to his perception of the manner in which Leighton is conducting the litigation and, in particular, his perception of its use of its superior financial resources to frustrate Basetec's entitlements. He said: I believe that I can help reduce this conduct through the media and through politicians and by placing pressure on Leighton and other construction giants through exposing their activities in using our courts for their dirty work. I believe until something is done either by the courts or politicians, this conduct will continue and more small to medium size businesses and families will continue to go under. 29 As is apparent in these passages, Mr Figallo has cast his conduct in terms of the discharge of a duty in the public interest. For the purposes of the interlocutory application, I am willing to accept that that is a significant aspect of Mr Figallo's motivation but there are a number of passages in the communications which show that Mr Figallo is also intent in bringing pressure to bear on Leighton in Basetec's interests. 30 Mr Figallo explained the forceful and profane language in his voicemails on 30 June and 1 July 2015 by his reading of an article in the media about a businessman in Western Australia who was said to have committed suicide after his business had not received an expected payment from a subsidiary of Leighton. He deposed to becoming very emotional after reading the email and to his wish to convey to Mr Kirkwood how angry and upset he was. He acknowledges that he informed Mr Kirkwood that he intended to fight Leighton through every avenue he knew, including through the media and through politicians. 31 Leighton put at the forefront of its submissions the prospect that Mr Figallo will commit a contempt of court unless restrained from doing so. It placed considerable reliance upon Y and Z v W [2007] NSWCA 329; (2007) 70 NSWLR 377 and, in particular, the statement by Ipp JA of the following principles: (1) The court has jurisdiction to grant an interlocutory injunction restraining a threatened contempt of court; (2) Misusing the court's processes, at least when other parties are thereby prejudiced, may amount to a contempt; (3) It is a contempt of court to obstruct the due administration of justice by attempting to induce a settlement of an action by improper threats or intimidation; (4) The bringing of improper pressure on a party to collateral proceedings amounts to a contempt of court (involving the obstruction of the due administration of justice) irrespective of whether or not the pressured party is, in fact, deterred from litigating; (5) In a contempt involving obstruction of the administration of justice, the plaintiff must prove, according to the criminal standard of proof, that the material in question has, as a matter of practical reality, a tendency to interfere with the course of justice in a particular case. 32 Leighton also referred to other authority, indicating that the courts will intervene to restrain the imposition of improper pressure on a litigant in relation to the conduct or settlement of litigation. In Harkianakis v Skalkos (1997) 42 NSWLR 22, Mason P also summarised a number of the applicable principles. These include the onus of proof in a charge of contempt being the criminal onus; the requirement on the claimant to demonstrate to the criminal standard that the publication in question had, as a matter of practical reality, a tendency to interfere with the course of justice in the particular case; that an intention to interfere with the due administration of justice is not necessary to constitute a contempt; that successful interference with a party's conduct of proceedings is not necessary for proof of liability for contempt by improper pressure; and that the Court must be alert to the distinction between acceptable pressure and improper pressure. 33 In Willshire-Smith v Votino Bros Pty Ltd (1993) 41 FCR 496 at 505, O'Loughlin J summarised the matters about which the Court must be satisfied: [T]here must be some real risk for there will be no contempt if the possibility of influence is remote. On the other hand, the assessment must be made in an objective setting. It is not to the point to acknowledge that in this case the company has not been overborne. If that was a factor to be taken into consideration then no litigant who was prepared to complain could ever establish the existence of a risk of inhibition. The correct test is to determine whether the conduct complained of amounted to improper pressure to induce a litigant to withdraw from proceedings or settle them on terms that he regarded as inadequate. If the conduct amounted to such improper pressure it would not matter that it failed to achieve its objective. 34 Accordingly, the critical question for the Court's consideration is whether the pressure which Mr Figallo is undoubtedly seeking to bring to bear on Leighton can be characterised as being, prima facie, improper. Given the effect of the injunction sought and the circumstance that there will not be a final adjudication at trial of whether Mr Figallo has committed a contempt, I consider it appropriate to proceed on the basis that the court should have a strong feeling of persuasion that Mr Figallo's conduct may constitute a contempt. 35 In assessing whether Leighton has established its case to that extent, a number of considerations are, in my opinion, pertinent. These include the importance of the public interest in freedom of speech. See Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 at [31]. The freedom is not absolute, but it is a freedom which the Court does not lightly restrain by injunction. As Gleeson CJ and Crennan J observed at [32], it is one thing for the law to impose consequences, civil or criminal, in the case of an abuse of the right of free speech; it is another matter for a Court to interfere with the right of free speech by a prior restraint. 36 Their Honours also referred to the exceptional caution with which the power to grant an interlocutory injunction defamation cases is exercised. However, the authorities show that the Court does not have that same caution about intervening when the issue is a contempt or threatened contempt of the Court. 37 Another relevant matter is the potential public interest in being informed of the matters about which Mr Figallo complains. The Court, of course, does not express any view about whether Leighton has engaged in any of the forms of conduct which Mr Figallo attributes to it. It would be inappropriate to do so. However, the appropriateness of that conduct, if it occurred, being brought to the attention of the Australian public and to the attention of public authorities is a different matter. Leighton is, I think I am permitted to know, a major building company and it is notorious that it is engaged in major building works pursuant to contracts with governments in Australia. Those matters, by themselves, therefore, give rise to some public interest in Leighton's operations. 38 The court should not readily, in those circumstances, impose restraints which would have the effect of inhibiting public discussion or, indeed, exposure, if that be appropriate, of Leighton's conduct. It is appropriate, in other words, for the Court to have regard to the public interest in this context as well as Leighton's own interest. 39 Next, I think it appropriate to proceed on the basis that Leighton is a substantial corporation with substantial resources and that it can be expected to have the resilience with which to withstand much of the pressure which Mr Figallo is attempting to apply. It is not to be likened to an individual litigant, let alone a vulnerable individual litigant. This consideration is pertinent because the authorities show that whether or not a contempt is committed by public statements calculated to influence a litigant in proceedings depends upon whether there is a real risk, as opposed to a real possibility, of the party being influenced by the statements: State of Victoria v Australian Building Construction Employees' and Builders Labourers' Federation (1982) 41 ALR 71 at 88-9. 40 The relevance of the ability of the party to whom the conduct is directed to withstand the pressure and, conversely, the vulnerability of such a party, has been considered in Resolute Ltd v Warnes [2000] WASCA 359, in particular at [13], and in Gallagher v Destiny Publications Pty Ltd [2015] WASC 40 at [25]. 41 Next, I regard it pertinent that the first two injunctions which Leighton seeks are directed to restraining Mr Figallo from communicating with Leighton itself and its officers, employees and agents and its parent company and its officers, employees and agents. In substance, Leighton seeks restraint on Mr Figallo from communicating with those in the entity with which Basetec is engaged in litigation. In my view, it would be a major step for the Court to prevent a litigant from communicating directly with its opponent in the litigation and to impose a requirement, as Leighton seeks, that it do so only by its own solicitor. 42 Next, I take into account that Leighton's evidence does not really show that Mr Figallo's conduct has, or is likely to, alter Leighton's approach to settlement. Mr Kirkwood deposes only that, as a result of the communications from Mr Figallo, Leighton decided to request the mediator to terminate the mediation process. 43 That statement does not indicate the nature of the relationship between the conduct and the termination of the mediation. Nor does it indicate any change of attitude by Leighton to the question of settlement. Leighton may, for example, have already decided not to pursue settlement further or it may have decided that because of the nature of the communications, that it would prefer to take the matter to judgment and to obtain vindication. It is noteworthy that Mr Kirkwood does not make any statement to the effect that Leighton would like to achieve a settlement but feels inhibited from taking any step to that end by reason of Mr Figallo's conduct. 44 I take into account that Leighton has not, at any time, caused to be commenced contempt proceedings against Mr Figallo. That has been an option open to it and in some respects, proceedings of that kind would provide a better vehicle for the determination of some of the factual issues which arise. 45 It is also appropriate to keep in mind that Mr Figallo's conduct has not been continuous. Looking at it in the broad, there appear to have been a series of communications in October 2014, nothing then of substance until April 2015 when there was a resumption, and then a further resumption on 30 June 2015. Nevertheless, I accept Leighton's submission that the communications, and, in particular, Mr Figallo's voicemail messages on 30 June and 1 July 2015 evidence escalating conduct by Mr Figallo. The manner of expression and the forceful language used by Mr Figallo in those messages does him no credit. It may be that the significance of those voicemail messages is mitigated to some extent by the emotional response to which Mr Figallo has deposed, upon his learning of the death of the businessman in Western Australia. Nevertheless they appear to be a stepping up in the tone and intensity of Mr Figallo's conduct. 46 Many of the matters just mentioned tell against the grant of the interlocutory injunctions. However, ultimately I am persuaded that it is appropriate to grant injunctions of the kind sought by Leighton, although in modified form only. Some matters in particular have led to this conclusion. 47 First, there is Mr Figallo's disparagement of the Courts and of members of the judiciary in his communications. I have not set out in these reasons his statements of that kind. While the Courts can be expected to accept criticism from time to time, some of Mr Figallo's comments about the Courts and about members of the judiciary appear to be contemptuous in that they imply that the Courts are willing to act at the bidding of Leighton, rather than acting impartially. Conduct of this kind can be contempt: Gallagher v Durack (1983) 45 ALR 53. 48 I also think it very pertinent that Mr Figallo has not, even when faced with Leighton's present application, made any acknowledgment of the wrongfulness of his conduct or any statement of willingness to modify it. 49 If, as his counsel suggested, the communications commencing on 30 June were merely a manifestation of a temporary emotional upset, it would have been natural for Mr Figallo to have recognised that and for him to have stated his intention not to continue communications of that kind. Instead, as I have already indicated, Mr Figallo has made it plain, that unless restrained by the Court, he will continue to make statements of the same kind. He may be sincere when he says that he feels that it is his duty to do so, but that does not give the Court any comfort that Mr Figallo will not continue his conduct. On the contrary, the stated intention of Mr Figallo is to continue statements which, to use the language of Hunt J in Commercial Bank of Australia Ltd v Preston [1981] 2 NSWLR 554, constitute a form of public abuse or obloquy and which may well amount to a contempt of the Court. 50 Thirdly, it is apparent that, despite the advice of Basetec's own solicitors, Mr Figallo has not tempered his conduct. 51 For these reasons, despite the matters which point against the grant of the injunctions, I am persuaded that it is appropriate to accede to Leighton's application. 52 My attitude may well have been different had Mr Figallo made some acknowledgement of the inappropriateness of his conduct and a statement of intention to modify it. 53 However, I am not prepared to grant injunctions in the wide terms sought by Leighton. First, as already indicated, there is no basis upon which the Court should issue restraints to Basetec, or its officers and employees more generally. The injunctions will be confined to Mr Charles Figallo only. 54 I consider that the injunctions should be confined to restraining conduct: …which is calculated to intimidate, harass or otherwise bring improper pressure on the respondent, including its officers, employees or agents in respect of the conduct of the proceedings. 55 It would not be appropriate to put an absolute prohibition on Mr Figallo from communicating with Mr Kirkwood or Ms Battle or the other persons as sought by Leighton. The only limitation on his ability to communicate with those persons should be in the manner just described. 56 In those circumstances there is a question as to whether the Court ought to accept the undertaking proffered by Mr Figallo in relation to the settlement discussions. I think it preferable for all the matters to be incorporated in the one document and so, instead of accepting Mr Figallo's undertaking, I will issue an injunction in the same terms. I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice White.

Basetec Services Pty Ltd v Leighton Contractors Pty Ltd

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