Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd

1. The order in paragraph 1 of the orders made on 23 July 2015 be vacated. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

BESANKO J: 1 On 23 July 2015, I made an order that the Registrar be directed to make application for punishment of continuing contempt pursuant to r 42.16 of the Federal Court Rules 2011 (Cth) in respect of failures by the first, second, fourth, six and seventh respondents respectively to comply with orders made by the Court on 19 June 2014 (Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd [2015] FCA 743). Rule 42.16 is in the following terms: 42.16 Application or proceeding by the Registrar (1) If it is alleged that a person is guilty of contempt of the Court, a party may apply to the Court for an order directing the Registrar to make application in the proceeding, or to start a proceeding, for punishment of the contempt. (2) Subrule (1) does not affect any right of a person to make application in the proceeding for, or to start a proceeding for, punishment of contempt. 2 The District Registrar Victoria Registry, Federal Court of Australia has applied by interlocutory application for an order that the order in paragraph 1 of the orders made on 23 July 2015 be vacated or set aside. The basis of the District Registrar's application is that there is no reasonable prospect that he will be able to prove beyond reasonable doubt a necessary element of the contempt charges. The proposed contempt charges relate to the failure by the respective respondents to pay fines and the necessary element is that the respondent has or had the capacity to pay the fines. The District Registrar relies on the decision of Siminton v Australian Prudential Regulation Authority (No 3) (2008) 168 FCR 140 (Siminton) to establish the proposition that he must establish that the contempt was wilful and contumacious and not accidental and unintentional, and that in order to do that in a case where the alleged contempt is the non-payment of fines, he must prove beyond reasonable doubt that each of the respondents had the capacity to pay the fines. The District Registrar relies upon an affidavit of Mr Evan Evagorou sworn on 21 July 2016 to establish the proposition that he will not be able to prove that matter as a matter of fact. Mr Evagorou is a lawyer at the Australian Government Solicitor. 3 I heard the substantive claims in this proceeding in September 2013 and delivered reasons and made orders on 26 November 2013 (Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd [2013] FCA 1255). My orders included declarations, injunctions and other orders. The main claims made by the applicant were that the respondents had engaged in misleading or deceptive conduct in contravention of s 18 of the Australian Consumer Law (Schedule 2 to the Competition and Consumer Act 2010 (Cth)) and had infringed the applicant's trade marks. 4 The respondents did not comply with the orders and the applicant brought proceedings for contempt. On 19 June 2014, I delivered reasons and made orders on its application (Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd [2014] FCA 637). I made findings of contempt and made orders against the respondents for the payment of fines, including daily fines. 5 Other than the payment of $500 on 17 March 2015, none of the fines have been paid. That led to the orders I made on 23 July 2015 which were relevantly as follows: 1. The Registrar be directed to make application for punishment of continuing contempt, pursuant to rule 42.16 of the Federal Court Rules 2011 (Cth), in respect of: (a) the First Respondent's failure to comply with: (i) paragraphs 10 and 24 of the orders made by the Court in this proceeding on 19 June 2014 (2014 orders); and (ii) paragraphs 11 and 24 of the 2014 orders in respect of daily fines payable for the period from the date which was 21 days after the date the 2014 orders were made until the filing of the affidavit of Robert Frederick Jane sworn on 18 August 2014 (Jane Affidavit), arising from the continuing failure to comply with paragraph 7 of the orders made by the Court in this proceeding on 26 November 2013 (2013 orders). (b) the Second Respondent's failure to comply with: (i) paragraphs 12, 14 and 24 of the 2014 orders; and (ii) paragraphs 13 and 24 of the 2014 orders in respect of daily fines payable for the period from the date which was 21 days after the date the 2014 orders were made until the filing of the Jane Affidavit, arising from the continuing failure to comply with paragraph 7 of the 2013 orders. (c) the Fourth Respondent's failure to comply with: (i) paragraphs 15, 17 and 24 of the 2014 orders; and (ii) paragraphs 16 and 24 of the 2014 orders in respect of daily fines payable for the period from the date which was 21 days after the date the 2014 orders were made until the filing of the Jane Affidavit, arising from the continuing failure to comply with paragraph 7 of the 2013 orders. (d) the Sixth Respondent's failure to comply with: (i) paragraphs 18, 20, 21 and 24 of the 2014 orders; and (ii) paragraphs 19 and 24 of the 2014 orders in respect of daily fines payable for the period from the date which was 21 days after the date the 2014 orders were made until the filing of the Jane Affidavit, arising from the continuing failure to comply with paragraph 7 of the 2013 orders. (e) the Seventh Respondent's failure to comply with: (i) paragraphs 22 and 24 of the orders; and (ii) paragraphs 23 and 24 in respect of daily fines payable for the period from the date which was 21 days after the date the 2014 orders were made until the filing of the Jane Affidavit, arising from the continuing failure to comply with paragraph 7 of the 2013 orders. 6 The first respondent is ACN 149 801 141 Pty Ltd. The records of the Australian Securities and Investments Commission (ASIC) indicate that as at 20 July 2016, there was a strike off action in progress in relation to this company. Furthermore, the District Registrar has put before me a report prepared by Dun & Bradstreet (D & B) which indicates that the company has a "High risk of experiencing financial distress during the next 12 months" according to the D & B Delinquency score. That report is dated 2 May 2016. 7 The second respondent is Bob Jane Southern Motors Pty Ltd. The records of ASIC as at 20 July 2016 indicate that that company was deregistered on 1 January 2016. 8 The fourth respondent is Mr Robert Frederick Jane. He was made bankrupt on 8 July 2016. A certificate of the appointment of the trustees to his bankrupt estate was put before me. 9 The sixth respondent is Bob Jane Global Tyre Corporation (Hong Kong) Limited. A search made on 20 July 2016 indicates that that company is undergoing a "striking off". 10 The seventh respondent is ACN 154 904 604 Pty Ltd. The records of ASIC as at 20 July 2016 indicate that that company was deregistered on 13 November 2015. 11 In Siminton, the Full Court of this Court said that in a contempt proceeding by the District Registrar it is necessary for him or her to prove the elements of the charge and prove the charge beyond reasonable doubt. The District Registrar must prove that the contempt was wilful and contumacious, not accidental or unintentional (at [25]). The Court said (at [41], [42] and [43]): Accordingly, we do not think it is open to conclude that failure to pay the fine can be said to be wilful in the requisite sense if use of the only identifiable funds which are said to be available would constitute a contempt of other orders of the Court. … Although the appellant's counsel did not seek to withdraw the concession (that the appellant had capacity to pay at least part of the fine) on the appeal, we think that the appellant should not be held to the concession because the concession was based on a false legal premise and because, in fact, the District Registrar did not prove that the appellant had any monies which he could have applied to the payment of the fine without at the same time breaching the order made by Gray J. In the present case the appeal therefore succeeds, although not for any reason argued by the appellant. However, the fine imposed by the Full Court remains unsatisfied. The appellant remains bound to pay it and liable to be found guilty of contempt if it is established that he wilfully failed, or fails, to do so. 12 The District Registrar did not put his application for the vacating or setting aside of the order on the basis that the order should not have been made in the first place. He put his application on the basis that he has no reasonable prospect of successfully prosecuting a contempt proceeding for non-payment of fines and that to prosecute such a proceeding in those circumstances would be an abuse of process. In his written submissions in chief he referred to the fact that the Court had not been referred to Siminton and that the Court itself made no reference to capacity to pay. This provoked a response from the applicant (who assisted the Court with written submissions, but neither consented to, nor opposed, the District Registrar's application) which noted that it is not necessary on the hearing of an application under r 42.16 for an applicant to prove the contempt before an order can be made. The position is as I held in Bob Jane Corporation Pty Ltd v ACN 149 801 141 Pty Ltd [2015] FCA 743 at [17]. In any event, in his written reply submissions, the District Registrar made it clear he was not being critical of the applicant for not drawing the Court's attention to Siminton and that he was not challenging the order, but submitting that the evidence he has would not support contempt charges. I should say that I have had regard to the applicant's written submissions, but none of those submissions persuade me that I should not make the order sought by the District Registrar. 13 I am satisfied that, having regard to the evidence adduced by the District Registrar, there is no reasonable prospect that he will be able to prove to the required standard that any of the respondents had or have the capacity to pay the fines. In those circumstances, I think it is appropriate to vacate the order in paragraph 1 of the orders made on 23 July 2015. I certify that the preceding thirteen (13) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Besanko.