JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : COMMISSIONER FOR FAIR TRADING -v- HOLZ & ANOR [2006] WASC 202

MATTER : Application for an injunction under s 74 and s 76 of the Fair Trading Act 1987 (WA)

Contempt of court - Breach of undertaking to court - Breach admitted - Whether breach deliberate and intentional

Fair Trading Act 1987 (WA), s 14(1)

Plaintiff : Department of Consumer & Employment Protection

Ainsworth v Hanrahan (1991) 25 NSWLR 155

Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 161 CLR 98

Attorney­General for New South Wales v Dean (1990) 20 NSWLR 650

Australian Consolidated Press Ltd v Morgan [1965] HCA 21; (1965) 112 CLR 483

Castlecity Pty Ltd v New Vintage Nominees Pty Ltd [2002] WASC 2

R v Zhong Wen Huang Wong (1995) 16 WAR 219

Registrar of the Court of Appeal v Maniam (No 2) (1992) 26 NSWLR 309

Witham v Holloway (1995) 183 CLR 525

1 TEMPLEMAN J: This is a summons brought by the Commissioner for Fair Trading against Katharina Isobell Holz in which the commissioner seeks to have Mrs Holz committed for breaches of undertakings given to the Court on 17 June 2005 and again in the same terms on 3 August 2005.

2 The background to the matter is that Mrs Holz and her husband were subject of proceedings by the Commissioner for Fair Trading in which it was alleged against them that they had engaged in conduct contrary to s 14(1) of the Fair Trading Act 1987 (WA). The specific allegation against the Holzes was that they induced members of the public to pay for photographs and for promotion of themselves and their photographs on the Internet, by leading people to believe that if they paid the Holzes for those services there would be a reasonable prospect that the persons concerned would obtain paid employment as photographic models either interstate or overseas.

3 The Commissioner sought interlocutory relief initially and it was in the context of that application that the Holzes gave the undertakings which Mrs Holz is now said to have breached. There were three undertakings and they were in the following terms:

"(1) the defendants and each of them be restrained from representing or describing themselves or each other, whether orally or in writing, as 'model consultants' or 'talent scouts'.

(2) the defendants and each of them be restrained from identifying themselves to members of the public by means of identification cards or otherwise as being affiliated in any way with the International Freelance Models Organisation of the United States of America or with any other international organisation.

(3) the defendants and each of them be restrained from representing, whether orally or in writing, to anyone that advertisements for models from other Web sites are 'job or employment opportunities...' "

4 The reference to identification cards is a reference to business cards used by the Holzes, and in particular Mrs Holz, in which she described herself as a photographic model consultant. The cards gave the impression that Mrs Holz was working or in some way involved in IFMO, which is the International Freelance Models Organisation (USA).

5 Mrs Holz' modus operandi was, it seems, to look out for persons who she thought might be potential models and to stop them in the street to introduce herself. She would explain the reason for stopping the person concerned, suggesting that that person might be suitable as a model. She would hand the subject a card and invite that person or, if the person was under 18, that person's parents, to telephone Mrs Holz at a time and on a date which she wrote on the back of the card either immediately before handing it to the person or in advance of the day on which the contact was made.

6 The complaint which is the subject of this application arises from two occasions on which Mrs Holz handed out business cards which were in terms that certainly resulted in breach of the undertaking; the undertaking of course being to the same effect as an order, an injunction granted by the Court.

7 The first occasion was on 26 August 2005 when Mrs Holz handed one of her cards to a Katie Watkins, a schoolgirl, in Perth. It is not necessary to go into the details of the conversation between Mrs Holz and Ms Watkins. They are set out in Ms Watkins' affidavit. What is relevant is that Mrs Holz gave the card to Ms Watkins and, as I have said, the card described Mrs Holz as a photographic model consultant. That was a breach of the undertaking; and the card had a reference on it to the International Freelance Models Organisation of the USA, and that was a further breach of the undertaking.

8 That matter was drawn to Mrs Holz' attention and she gave an explanation for it in an affidavit of 1 November 2005. She said she was aware that the undertaking she had given to the Court on 17 June was a serious matter. She realised that as a consequence of the undertaking changes should be made to the business cards that she used when approaching persons who were potential models but she said that because of the competitive prices given to her by business card printers in Bali, there would be some delay in obtaining new business cards and she wanted to use her existing stock. She said she decided that the best way of doing that in the interim was to amend the business cards by changing them with a felt tip pen by removing the words "Consultant", "International" and "USA" on the back and front of each of the business cards that she was planning to use on the afternoon of 26 August 2005.

9 She said that she made a point of sitting at her desk at home and taking all of the remaining business cards on which offending words were printed and blacking out all of those words. She said she also amended all of her further stock of business cards she had in the photographic studio. She placed an order for new cards on 18 June. They arrived on about 30 August and from then on she did not use the old stock. Mrs Holz exhibited to her affidavit a photocopy of a card, not an original card, showing that on the front the word "Consultant" and the reference to the International Freelance Models Organisation (USA) had been deleted and that on the back a reference to "overseas", in the context of interstate or overseas modelling work, had been deleted.

10 There was then a second contravention which came to light. That was in relation to a card handed to another schoolgirl, Jasmine Lee Hawes, which had actually been handed to her a few days earlier, on 21 August 2005. That card, which is in evidence now, had only the word "USA" deleted from its face. There were no deletions other than that, either to the face or to the reverse of the card. On the reverse Mrs Holz had written the day "Sunday", time "6.30-8.30" and the date "21 August 05", those being the date and times on which she invited the schoolgirl or her mother to contact her to see if she was interested in taking the matter further. The deletion of the word "USA" is not in black felt pen but in biro.

11 As to that, Mrs Holz gave a second explanation in a subsequent affidavit sworn on 7 December 2005. She said she particularly remembered, after the hearing on 16 June when the undertaking was first agreed, that her husband had telephoned her to tell her of the outcome and the need for them to conform to the terms of the undertaking to be given. She said that after the telephone call she went to a newsagency and bought a black permanent ink pen and amended all of the business cards that she was to use that afternoon, for handing to prospective models.

12 That is a repeat, essentially, of what she had said in the first affidavit. She said she took great care in changing all of the business cards that she had with her on that day: that she used the pen in the car to change all the cards she had with her at that time. On the next day she changed all the remaining cards she had or, she said, so she thought, by blacking out the words "Consultant", "International" and "USA" on the cards. She said when she swore her November affidavit she thought that the card she had handed to Katie Ann Watkins was the only card that had slipped through the card amendment process.

13 The affidavit of 7 December 2005 was made in response to Ms Hawes' affidavit of 25 November. Mrs Holz said:

"I thought at that time there were no other cards which had slipped through the amendment process, but now that I have read the Hawes affidavit I'm aware that a further card has been passed to a member of the public without me being aware that the words 'Photographic Model Consultant' were still shown on the card."

14 Mrs Holz said she could not be sure how it was that those words had not been erased on the business card handed to Ms Hawes and she said she could see that the letters "USA" had been blacked out. She was not able to give an explanation, but she surmised that at the time of making the amendments to the card she was interrupted by the telephone ringing or by one of her children or by her grandchild. She said she must have then sat down again and not noticed that the words "Photographic Model Consultant" had not been obliterated on the cards given subsequently to Ms Watkins and Ms Hawes.

15 There was then a third occasion on which a card was given out. This is not the subject of the committal application but it is, nevertheless, a relevant matter which has been the subject of evidence. That was a card given to Zoe Nancy Johnson who was handed a card also on 21 August 2005, that is, the same day as Ms Watkins was handed her card. The card that was given to Ms Johnson was, at the time she made an affidavit describing this event, lost, but it came to light subsequently. That is also a card on which the word "USA" has been obliterated in biro and it is another card on which Mrs Holz had written the contact date and time on the reverse side.

16 The explanation given by Mrs Holz is challenged in cross-examination on her affidavits this morning. There are a number of matters which need to be mentioned. One is that there is no evidence other than that from Mrs Holz about when she actually obliterated in black felt pen the offending words on the card which she exhibited to her affidavit of 1 November 2005. There is no original card with that deletion in evidence because Mrs Holz says she has destroyed all the cards. Mrs Holz herself, in cross-examination, drew attention to the fact that the deletions on the cards given to Ms Watkins and Ms Hawes of the word "USA" had been effected in biro and not in black felt pen. In the light of that Mrs Holz advanced a further explanation, one which had not been advanced previously and which was therefore heard for the first time in court. The explanation was that those two cards were among others which she had altered much earlier in response to a different or earlier order which required the deletion of the word "USA", that being, as she said, a particular bone of contention with the Commissioner for Fair Trading. Her explanation was that those cards must have been in some way mixed up with the cards which she obliterated in felt pen and which she intended to use following the undertaking and in compliance with it.

17 I do not accept Mrs Holz' explanation. I think that what happened was that Mrs Holz, having given the undertaking (which certainly requires deletion of the reference to the United States of America) did delete those words or that abbreviation "USA" on a number of cards, one of which was handed to Ms Hawes and one of which was handed to Ms Johnson. I think that that is all that Mrs Holz did in compliance with the undertaking which she had given and I am satisfied beyond a reasonable doubt that that is all that she did.

18 I am quite prepared to accept that Mrs Holz subsequently did obliterate the offending words on the card which is exhibit KIH1 to her affidavit and that she may have done so on a number of other cards in the way that she described, all of which have since been destroyed, but I am not persuaded that she did that in response to and in compliance with the undertaking. I think she did that in response to the chamber summons in which it was sought to commit her for contempt. I am satisfied of that beyond a reasonable doubt.

19 If Mrs Holz had, as she said, a clear understanding of and regard for the undertaking, then I think it would have been obvious to her when she was handing out the cards to Ms Watkins, Ms Hawes and Ms Johnson, that the cards did not comply with the undertaking. It would have become immediately apparent to her that those cards did not have on them the heavy obliteration which appears on the exhibit KIH1.

20 Mrs Holz said in her evidence, and I accept, that when she engages with somebody in the street time is of the essence and it is important to maintain eye contact and to explain very quickly what her position is and the reason for her speaking to the person she has identified. But at the same time it seems to me that it would have been perfectly clear to her, when handing out each card that, as I have said, it did not contain these heavy obliterations, particularly as at least in one of the cases Mrs Holz accepts that she may well have written the date and time for contact on the card when she handed it out. If she had been writing dates and times in advance of going out to identify potential models, when she did not have that pressure to act very quickly, she would have had even more time to appreciate that the cards did not comply with the undertaking.

21 I am satisfied beyond a reasonable doubt that when Mrs Holz appreciated, as she did in the witness box, that the cards bearing the biro deletions could not have involved part completion of the deletions because they were not in felt pen, she sought to proffer a further explanation which, as I say, I am satisfied beyond a reasonable doubt cannot be maintained.

22 I am therefore satisfied beyond a reasonable doubt not only that the contempt is made out, because that is admitted; I am satisfied beyond a reasonable doubt that Mrs Holz' actions in handing out these cards to Ms Watkins and Ms Hawes were a deliberate and intentional action because she chose what to cross out and she did so knowing precisely what was required of her pursuant to the undertaking which she had given.

23 It is in those circumstances that I will be required to impose a punishment - because contempt proceedings are in the nature of punishment as well as enforcing the authority of the Court - but before I do that I will hear submissions as to what the appropriate course would be and of course a plea in mitigation because it is well established that the usual principles applying to sentencing apply in these circumstances also.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : COMMISSIONER FOR FAIR TRADING -v- HOLZ & ANOR [2006] WASC 202 (S)

MATTER : Application for an injunction under s 74 and s 76 of the Fair Trading Act 1987 (WA)

Contempt of court - Penalty - Applying general principles of punishment - Turns on own facts

Suspended sentence conditional on compliance with injunction and on completing community service

Plaintiff : Department of Consumer & Employment Protection

Australasian Meat Industry Employees Union v Mudginberri Station Pty Ltd [1986] HCA 46; (1986) 161 CLR 98

Australian Competition and Consumer Commission v Hughes [2001] ATPR 41­807

Australian Competition and Consumer Commission v World Netsafe Pty Ltd [2003] FCA 1501; (2003) 133 FCR 279

Australian Securities and Investments Commission v Matthews [1999] FCA 803; (1999) 32 ACSR 404

Castlecity Pty Ltd v New Vintage Nominees Pty Ltd [2003] WASCA 30

Construction, Forestry, Mining and Energy Union v BHP Steel (AIS) Pty Ltd [2003] FCAFC 13; (2003) 196 ALR 350

Kennedy v Lovell [2002] WASCA 226

Ryan v Wright (No 2) [2004] NSWSC 1019

1 TEMPLEMAN J: On 3 July 2006 Mrs Holz was sentenced. What follows is an edited transcript of my sentencing remarks:

"Mrs Holz, would you come to the front of the Court, please. You can stand by Mr Harrison, so that I can talk to you. I have to impose a punishment on you, Mrs Holz, for your contempt of the Court in failing to comply with the undertakings which you gave to Le Miere J in June and again in August of last year. I have already given my reasons for holding that you were in contempt of Court and, indeed, your contempt was admitted.

What was in issue was the circumstances in which that contempt was committed and I have given reasons on the previous occasion when we were here for my conclusion that there was a deliberate contempt on two occasions, on 21 and 26 August of last year when you handed out business cards containing words which you were prohibited from using by the undertaking.

I appreciate that you gave an apology but the apology carried no weight with me because it was based on an entirely false premise. That is why it does not in any way purge the contempt which I found that you committed.

You have to understand that there is a substantial public interest in ensuring that orders of Court and undertakings given to the Court are complied with. It is absolutely essential for the wellbeing of society that the authority of the Court be upheld and that will, where there has been a contempt, necessitate an appropriate punishment.

There is no doubt that the jurisdiction is one which involves a punishment of the contemnor; and that punishment will very frequently be significant and certainly can involve imprisonment until the contempt is purged. In imposing a punishment, I have to have regard to the usual principles which apply when Courts impose punishment on people and they include not only an appropriate punishment but rehabilitation to ensure that the person does not again commit that kind of offence.

There has to be a deterrent, that is, something which will deter you from any further conduct of this kind and something which acts as a general deterrent so that if there is anybody else in the community who is minded to disobey Court orders, then they understand that appropriate penalties will be visited on them.

In my view, having regard to the circumstances of the contempt, which I referred to in my findings, imprisonment is an appropriate penalty and a period of 28 days' imprisonment is, in my view, appropriate. I am willing to suspend that period of imprisonment for 12 months because I think and I hope that the threat of imprisonment will weigh heavily with you so that you will understand that you must comply with the orders made by Le Miere J on 15 September last year, and understand that if you do not comply with them then there will be no question about your going to prison for 28 days and any further punishment which might be warranted if you were to breach that order.

I have come to the conclusion that a fine would be inappropriate because I can see from the records that you have not paid fines on previous occasions and you told me that you were unemployed, although I gather you now have prospects of employment.

I think, therefore, that it is appropriate to impose a period of community service and in my view 60 hours is appropriate. That to be undertaken over a four-month period which will give you an opportunity to continue your new employment and will enable you to do that work over weekend periods. You must do that at the direction of a Community Corrections Officer and you must abide by directions which are given by that Community Corrections Officer as to the nature of the work and the time during which you are required to do it.

You have to understand that the suspension of the imprisonment is conditional upon your not only complying with the order made by Le Miere J but also complying with your obligation which you now have to undertake the community service as directed by a Community Corrections Officer. Do you understand that?

Then I will impose that penalty. There will be a sentence of 28 days' imprisonment suspended for 12 months on condition that you comply with Le Miere J's order of 15 September and that you carry out 60 hours of community service over a four-month period as directed by a Community Corrections Officer. I will also order that you pay the costs of this application on a solicitor and own client basis."