Buchanan Turf Supplies Pty Limited v Premier Turf Supplies Pty Ltd

REASONS FOR JUDGMENT 1 The applicant, Buchanan Turf Supplies Pty Limited ('Buchanan Turf'), has moved by a notice of motion for a declaration that the second respondent is guilty of contempt by reason of contravention of Order 1 of the orders made by Hely J on 25 March 2003. This involved making representations that the first and second respondents could sell a variety of soft leaf buffalo grass called "Sir Walter". Buchanan Turf is the owner of plant breeders' rights in Sir Walter grass under the Plant Breeders Rights Act 1994 (Cth). 2 In reasons for judgment, dated 21 September 2004 ('the previous reasons'), I found that the second respondent ('Mr Garay') made the representations alleged in paragraphs (a), (b) and (c) of the statement of charge as follows: '[T]he Second Respondent did: (a) on 22 October 2003 at about 1.00 pm represented by telephone to Suzanne Mary Bernard Smith ('Mrs Smith') that he could sell the Sir Walter variety of grass to Mrs Smith; (b) on 22 October 2003 represented in person at 1 Darfield Close, Bolwarra Heights to Mrs Smith that he could sell the Sir Walter variety of grass to Mrs Smith; (c) on 22 October 2003 represented in person at 1 Darfield Close, Bolwarra Heights to Mrs Smith and Dr David Smith ('Dr Smith') that he could sell the Sir Walter variety of grass to Dr and Mrs Smith; I found the contempt was proved and I deferred the question of penalty. 3 Counsel for Buchanan Turf, Mr Marshall, has submitted that the appropriate penalty is that Mr Garay be committed to prison for sixteen weeks and that he pay the applicant's costs of and incidental to the notice of motion for contempt taxed on an indemnity basis. Buchanan Turf also seeks an order that funds that have been paid into its solicitor's trust account by or on behalf of Mr Garay pursuant to my order of 18 May 2004 be paid to Buchanan Turf on account of the costs ordered to be paid by Mr Garay. 4 Counsel for Mr Garay, Mr Wormington, contended that this is not a case where the contemnor should be imprisoned. He also informed me that Mr Garay consents to the order for indemnity costs as sought and has offered two undertakings to the Court to which I shall refer. 5 The facts of this case are set out in the previous reasons. As set out there, Dr and Mrs Smith gave evidence that Mr Garay had made representations to them that he could sell Sir Walter and laid grass on their property which he said was Sir Walter but was not. The value of the transactions between the Smiths and Mr Garay was $13,000. 6 On 23 September 2004, I ordered Mr Garay to file and serve the affidavits of any witness and the report of any expert upon which he sought to rely by 21 October 2004 and, if he wished to rely on a pre-sentence report, to take all reasonable steps to obtain a pre-sentence report from the New South Wales Probation and Parole Service and to provide a copy of that report to me by 18 November 2004. Mr Garay provided no such material and no application was made to extend the time for compliance with the directions. 7 The hearing of the issue of penalty was listed on Monday, 6 December 2004. On Friday, 3 December 2004 Mr Wiggins, a solicitor who had ceased acting for Mr Garay before the substantive hearing, contacted my chambers to advise that he had been re-engaged to act for Mr Garay. He was presumably acting on instructions. Mr Wiggins requested a vacation of the hearing of the penalty issue on the basis that he had been unable to obtain a pre-sentence report. No application or affidavit was filed in support of this request. I refused the request for an adjournment and the hearing took place on Monday, 6 December. 8 At the hearing, counsel for Mr Garay stated from the bar table but without evidence that the reason for the pre-sentence report not being obtained in time was that Mr Garay had been seeing a psychologist and he needed to undergo psychiatric assessment before the pre-sentence report could be provided. Such an explanation, without supporting evidence, is totally unsatisfactory. There was, in my view, sufficient time between my orders of 23 September 2004 and the hearing on 6 December 2004 to obtain any necessary assessment and pre-sentence report or to apply to the Court for variation of the orders. In any event, no evidence was filed before the hearing which could support any prolonging of this case. I also note that this was not the first time that an application was made on behalf of Mr Garay at the last minute to adjourn a hearing in this matter. 9 Mr Marshall referred me to s 16A of the Crimes Act 1914 (Cth) which, although it is not strictly applicable in the context of contempt, nonetheless provides a helpful list of factors that may be taken into account when determining penalty. That section provides as follows: (1) In determining the sentence to be passed, or the order to be made, in respect of any person for a federal offence, a court must impose a sentence or make an order that is of a severity appropriate in all the circumstances of the offence. (2) In addition to any other matters, the court must take into account such of the following matters as are relevant and known to the court: (a) the nature and circumstances of the offence; (b) other offences (if any) that are required or permitted to be taken into account; (c) if the offence forms part of a course of conduct consisting of a series of criminal acts of the same or a similar character - that course of conduct; (d) the personal circumstances of any victim of the offence; (e) any injury, loss or damage resulting from the offence; (f) the degree to which the person has shown contrition for the offence: (i) by taking action to make reparation for any injury, loss or damage resulting from the offence; or (ii) in any other manner; (g) if the person has pleaded guilty to the charge in respect of the offence - that fact; (h) the degree to which the person has co-operated with law enforcement agencies in the investigation of the offence or of other offences; (j) the deterrent effect that any sentence or order under consideration may have on the person; (k) the need to ensure that the person is adequately punished for the offence; (m) the character, antecedents, cultural background, age, means and physical or mental condition of the person; (n) the prospect of rehabilitation of the person; (p) the probable effect that any sentence or order under consideration would have on any of the person's family or dependants. Submissions have been addressed to me by both counsel on the basis of these factors and I will consider them generally when determining Mr Garay's penalty. 10 Mr Marshall drew my attention to a finding that had been made by Hely J in the earlier proceedings before his Honour that Mr Garay had concocted a false story about his invoice books being stolen. In effect Mr Marshall submits that this indicates that Mr Garay swore a false affidavit of discovery and gave false evidence before Hely J. Mr Marshall submits that my finding, that Mr Garay made the alleged representations, when Mr Garay has denied and continues to deny making those representations, suggests that Mr Garay has continued to disregard the authority of this Court. 11 Charges for contempt have also been filed in the Supreme Court of New South Wales ('the Supreme Court'). The amended statement of charge was filed in the Supreme Court on 5 March 2004 in respect of events from November 2003 to February 2004. While reference to Sir Walter was included in the original orders that were made against Mr Garay, the contempt charges related to other subject matter, being charges in respect of breaches of the Home Building Act 1989 (NSW) and the Fair Trading Act 1987 (NSW). Orders had been made against Mr Garay whereby he was restrained inter alia from undertaking any residential building work, contracting with any other person to undertake residential building work, advertising that he was willing or able to undertake residential building work or representing either expressly or impliedly that he was the holder of a licence. 12 Mr Garay has admitted to those contempt charges and has indicated that he proposes to plead guilty to them. There is no allegation that he breached the order relating to Sir Walter. No penalty has yet been determined. The time period of the actions that constituted that contempt were nearly contemporaneous with the actions the subject of the contempt that I determined, which occurred in October 2003. 13 In contrast to Mr Garay's approach to the Supreme Court proceedings, he has defended the charges in this Court. Further, when a subpoena was served by Buchanan Turf seeking access to documents in respect of the Supreme Court proceedings, Mr Garay filed a notice of motion to set aside the subpoena, despite the fact that his own counsel had previously informed me of the existence of those proceedings. The notice of motion was withdrawn before the return date. 14 Mr Marshall contends that the second respondent withdrew the notice of motion in response to a letter from Buchanan Turf's solicitors to Mr Garay's solicitors which said: 'Your firm is now well acquainted with this matter and ought to know that any motion to set aside the subject subpoena is doomed to fail. At the sentencing we will indicate to Justice Bennett that this Notice of Motion constitutes further evidence of the continuing lack of remorse in your client.' 15 At the hearing it was only when it was pointed out that there was no evidence of the matters relied upon by Mr Wormington in his submissions that Mr Garay gave evidence. The most that he would say in response to questioning about the representations that I found that he had made to the Smiths was that he was sorry that he had been found guilty of contempt. He did not express any concern about Dr and Mrs Smith or that he had made the representations themselves. He said that he was sorry for what had happened but not, as such, about doing anything wrong. He said that he had been found guilty and had recognised that he had to face the consequences. He did recognise that he was himself responsible for what happened. 16 It cannot be said, in my view, that Mr Garay has shown appropriate contrition. He has not admitted the representations made to the Smiths and he did not initially offer to compensate them for the fact that he laid "Kikuyu" grass instead of Sir Walter, their choice. He did at least give evidence before me at the hearing on penalty. 17 Mr Garay has now given an undertaking to reimburse Dr and Mrs Smith for all of the money they paid for the landscaping and turf work that he performed for them (as referred to in the previous reasons). That offer was only raised in written submissions filed after the hearing on penalty. Indeed, the matter was raised by Mr Marshall during the hearing but was not responded to at that time. 18 Mr Garay gave evidence that he was able to pay costs and any fine imposed. He said that he has two residential properties. The properties are both mortgaged but the estimated value of each property is well in excess of the mortgage on that property. 19 Mr Garay also said that he was currently seeing a psychologist and had previously seen a psychiatrist for depression. 20 Also in evidence was an affidavit filed by Mr Garay in the Supreme Court on 27 June 2004. In that affidavit, Mr Garay made the following statement: 'When I was approached by Mr Bruinenberg I thought I was acting as agent for Brent Redman the owner of Buchannan Turf who was the applicant in the Federal Court proceedings which led to my financial difficulties and the initial injunction. My defiance was directed at Brent Redman and I sincerely apologise to both the Department and the Court for my actions.' 21 This evidence was presented in conjunction with an affidavit of Mr Redman in which Mr Redman stated that on 28 October 2004 he had attended the Local Court at Maitland and caused a complaint and summons - Apprehended Violence to be issued in respect of Mr Garay. On 11 November 2004, a Registrar of the Local Court at Maitland made an interim apprehended violence order against Mr Garay based on that complaint. During the course of the penalty hearing before me Mr Garay, by his counsel, offered an undertaking to the Court in accordance with the apprehended violence order that had been made. 22 In addition to Mr Garay's oral submissions the following written submissions were made on his behalf. They are in summary: (a) This was Mr Garay's first offence of this nature and the first offence involving dishonesty, his only other conviction being for low range drink driving. (b) The Court should not take into account the proceedings in the Supreme Court when assessing penalty as this would result in the second respondent being penalised twice for those other offences. (c) Mr Garay volunteered the details of the Supreme Court proceedings, demonstrating his contrition. (d) There is no evidence that Mr Garay's contempt was planned. (e) Mr Garay is unlikely to re-offend. There have been no allegations of further interference with Buchanan Turf's rights over the past twenty months. (f) Mr Garay has instructed his counsel to apologise on his behalf and to assure the Court that in future he will not breach Buchanan Turf's rights or any order of this Court. (g) Mr Garay has already suffered because of this Court's proceedings by way of bad publicity and legal costs. Mr Garay is currently employed as a supervisor and sales person in his mother's company, One Stop Turf Supplies Pty Limited. That company is a family business with twelve employees. If Mr Garay were not able to carry out door -to-door sales in all likelihood the company would fail and the employees would be made redundant. (i) Mr Garay, is married with three dependent children aged 7, 6 and 10 weeks, he also supports financially a thirteen year old child from a previous relationship. (j) Mr Garay's 'life has hit an all-time low, and a psychologist is treating him for a major depressive order. He is currently taking, Afranil, an antidepressant'. (k) Mr Garay has been very involved in the local community as a regular sponsor of a Christmas party for disadvantaged children and a number of local junior sporting clubs. 23 Mr Wormington pointed out that Mr Garay's contempt was a civil contempt and that the function of civil contempt is coercive rather than punitive: Australian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98. He submitted that, given that there was no evidence of wilful disobedience, a fine or an order for costs would be sufficient punishment to satisfy the public interest aspect of a penalty. 24 The Court's power to punish contempt is conferred by s 31 of the Federal Court Act 1976 (Cth): '(1)Subject to any other Act, the Court has the same power to punish contempts of its power and authority as is possessed by the High Court in respect of contempts of the High Court.' Section 24 of the Judiciary Act 1903 (Cth) provides that: 'The High Court shall have the same power to punish contempts of its power and authority as is possessed at the commencement of this Act by the Supreme Court of Judicature in England.' 25 In Hughes v Australian Competition & Consumer Commission [2004] FCAFC 319 ('Hughes'), the Full Court noted at [52] that 'At the commencement of the Judiciary Act the Supreme Court of Judicature in England could impose penalties for civil and criminal contempts.' In Hughes, the Full Court found that the Court's power in this regard included a power to impose and to suspend penalties and sentences of imprisonment. 26 The Full Court in Hughes referred to Australian Securities and Investments Commission v Matthews (1999) 32 ACSR 404, a decision of Sackville J in which his Honour commented on suspended sentences of imprisonment at 411: 'This form of order has the added virtue, given the respondent's lack of contrition, of driving home the importance of abiding by orders made in the principal proceedings. It also recognises that the respondent has no previous convictions and that, as Carr J pointed out in DCT v Hickey at para 34, imprisonment is a measure of last resort.' 27 In Pelechowski v Registrar, Court of Appeal (1999) 198 CLR 435 at [88] McHugh J says in his dissenting judgment: 'In considering the appropriateness or otherwise of a sentence imposed for a contempt of court, it must always be borne in mind that the jurisdiction to commit for contempt exists so that the authority of the courts of law can be maintained. If breaches of the orders of the courts were regarded as of little moment, respect for and observance of the law would inevitably deteriorate and, ultimately, pose a threat to social order.' 28 RD Nicholson J set out the range of penalties available to the Court in contempt cases in Australian Competition & Consumer Commission v INFO4PC.com Pty Ltd (2002) 121 FCR 24 at [138] as being: (a) to commit a contemnor to prison for an indefinite period of time (b) to impose a fine for a wilful breach of an order or undertaking; (c) to impose a daily fine; (d) to order the sequestration of the assets of a contemnor; and (e) to suspend on condition any sentence of imprisonment that it might impose in respect to contempt. 29 In this case, while Mr Garay has now apologised for any trouble he has caused the Court and has offered to compensate the Smiths for the damages they suffered and to pay the applicant's costs on an indemnity basis, he has until now shown a complete disregard for court proceedings. 30 Just days before the hearing Mr Garay's solicitors asked to have the hearing adjourned despite having had over two months to obtain a pre-sentence report and to file evidence. This, together with his admitted contempt of the orders in the Supreme Court is generally indicative of his lack of regard for court procedures and orders. His statement regarding Mr Redman, in the affidavit referred to at [20], is a further indication of Mr Garay's lack of contrition. I note that the time of filing that affidavit was 27 June 2004, which was amidst the substantive hearing of these proceedings which was on 18 May 2004, 8 and 15 June 2004 and 12 July 2004. 31 Moreover, as I noted in the previous reasons, while the contempts proved occurred on only one day, I accepted evidence that Mr Garay not only breached the orders of Hely J but that he also frightened a frail Dr Smith and his wife by his intimidating manner in the process. The evidence of Mr Redman and Mr Garay's own affidavit suggests that this kind of behaviour was not necessarily unusual. 32 Given the seriousness of his contravention of the orders and his lack of contrition and co-operation with Court procedures during these proceedings, it seems to me to be a case where a fine and costs order would be inadequate to uphold the authority of this Court and to deter Mr Garay from offending in the future. 33 Mr Marshall has referred me to a number of authorities dealing with the question of penalty in contempt cases. Two of these cases Australian Competition & Consumer Commission v World Netsafe Pty Ltd (2003) 133 FCR 279 ('Netsafe'); Australian Competition & Consumer Commission v Purple Harmony Plates Pty Ltd (No 3)(2002) 196 ALR 576 ('Purple Harmony') bear some similarities with the instant case. There is, of course, no case which is perfectly analogous with the instant case. However, bearing in mind that a combination of factors is relevant to a determination of penalty, it is helpful to consider the similar weight of combinations of factors in other cases. 34 In Netsafe the respondent failed to comply with orders that he maintain a website proclaiming the nature of the findings against him, and forward a notice to members of World Netsafe. The Court held that the ACCC had proved the respondent was guilty of contempt. The respondent pleaded guilty to the charges, which was considered a mitigating factor in considering the appropriate sentence to be imposed by the Court. The respondent's contempt was found to be deliberate; he either thought it was not necessary to comply with the Court's order or that it was trivial. Although the respondent argued that the appropriate penalty was a fine, the Court held that in appropriates cases a fine and a prison term was an appropriate sentence. There were two contempt charges. The respondent was fined $1000 and sentenced to one month imprisonment for each offence. However, the warrant was to lie in the Registry on condition that the respondent complied with certain orders. 35 In Purple Harmony the company had been restrained from publishing material concerning the benefits of certain products and was required to put a corrective notice on the company's website. Nevertheless, publication continued, including publication on a new website. The company was fined $20,000 and the two natural persons $10,000 each. The fines were not paid. In respect of the first of these respondents, the Court found that there were mitigating circumstances and that the respondent had 'apologised unreservedly' and 'made disclosure of her assets' which showed an inability to pay the fine. That respondent was sentenced to one month's imprisonment, suspended on condition that she take all necessary steps to secure the transfer of the registration of the domain name for the company's website from the company to the ACCC. The second of these respondents was found by Goldberg J to be 'quite unrepentant' and was shown to have 'no remorse for his contempt'. Nevertheless, his Honour observed that this respondent was 'labouring under a delusion that he is the head of state of a non-existent state and that his conduct is beyond the reach of the laws of Australia. Mr Lyster should realise he is quite wrong in this respect.' Accordingly, his Honour made similar orders in respect of the second of the respondents as were made in respect to the first of the respondents. 36 More recently in Rip Curl International Pty Limited v Phone Lab Pty Limited [2004] FCA 1215, Hely J ordered that a warrant issue for the committal, for one month, of two respondents who had pleaded guilty to charges of contempt arising out of the sale of goods in breach of orders that they not sell counterfeit mobile phone accessories. The warrant was to lie in the Registry to the intent that it not be executed, provided the respondents refrained from further contravention of the Court's orders. While the two respondents had pleaded guilty to the contempt charge they also admitted their breaches were wilful and a contumacious disregard for the Court's orders. 37 In the instant case, a suspended sentence or an order that the warrant lie in the registry on condition that Mr Garay not commit further breaches of Hely J's orders seems to me to be the appropriate course, bearing in mind the mitigating factors raised by counsel for Mr Garay, the nature of contempts committed and the Court's objective of deterring contempts and upholding the authority of the Court. I do not think that merely ordering Mr Garay to pay a fine will be sufficient penalty, given the gravity of his offences, his past disregard for court procedures and the evidence of his financial means.. 38 Mr Garay consents to orders that he the pay applicant's costs on an indemnity basis and undertakes to reimburse Dr and Mrs Smith all of the moneys paid. Buchanan Turf's solicitor, Mr Griffiths, has sworn an affidavit to the effect that Buchanan Turf's total costs are $71,854.99. I note that Mr Garay consents to an order that the costs are fixed in that sum. I note that the applicant does not seek any order for costs against Mr Wiggins personally, on the basis that the indemnity costs are paid in full by Mr Garay. 39 Accordingly, the orders that I propose are: Upon the following undertakings given by the second respondent to the Court by his counsel: 1. An undertaking in terms of the Order in annexure A to the affidavit of Brent William Redman sworn 6 December 2004; and 2. That the second respondent will reimburse Dr and Mrs Smith all of the money paid by them for landscaping and turf work; The Court makes the following orders: 1. The second respondent be imprisoned for a period of two months. 2. A warrant for the second respondent's committal to prison for a period of two months issue. 3. The warrant lie in the Registry for a period of twelve months to the intent that it not be executed provided the second respondent refrains from contravening Order 1 of the Orders made by Hely J on 25 March 2003 while any such order remains in force. 4. The second respondent pay the applicant's costs of and incidental to the notice of motion for contempt in the gross sum of $71,854.99. 5. The funds held on trust or as controlled monies by the solicitors for the applicant, Messrs McDonald Johnson, Solicitors, that represent the amount of $5000 paid by or on behalf of the second respondent pursuant to the Orders of Bennett J of 18 May 2004 plus any interest accrued thereon be paid to the applicant forthwith on account of the costs ordered to be paid by the second respondent by Order 4 above. 40 I direct the applicant to send a draft warrant to my chambers within seven days of today's date. I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Bennett