Hughes v Australian Competition & Consumer Commission

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

On Appeal from a Single Judge of the Federal Court of Australia

BETWEEN: RICHARD DAVID HUGHES t/a Crowded Planet

AND: AUSTRALIAN COMPETITION & CONSUMER COMMISSION

2. Order 2(b) of the declarations made by Conti J on 29 April 2004 is set aside.

3. Order 4 of the Orders made by Conti J on 29 April 2004 is set aside and in lieu thereof the following order substituted:

'4. The balance of the above sentence of six months shall be suspended for a period of two years calculated from 29 April 2004 on the basis that if the respondent hereafter breaches Orders 5 and 6 of the Order made by Allsop J on 18 March 2002, the respondent will, if a judge so directs, serve all or such part as the judge directs, of the remainder of the six month period not served.'

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

On Appeal from a Single Judge of the Federal Court of Australia

AND: AUSTRALIAN COMPETITION & CONSUMER COMMISSION

REASONS FOR JUDGMENT THE COURT: Introduction 1 Richard David Hughes has, for some years, been mounting a campaign promoting the sale, through the Internet, of oral contraceptives both within Australia and overseas. He has made various claims about the comparative pricing and characteristics of the products on offer. He has been the subject of a number of proceedings in this Court. On 9 November 2000, Tamberlin J made orders against him including an order requiring a notice to be posted on an Internet site operated by Mr Hughes to the effect that oral contraceptives would not be sold or supplied to anyone in Australia. On 2 February 2001, Tamberlin J found Mr Hughes guilty of contempt of Court for breach of those Orders. He imposed a term of imprisonment of two weeks, which was suspended on condition that Mr Hughes amend the Internet site as required by the original order within 30 days. In March 2002, upon the application of the Australian Competition and Consumer Commission, Allsop J made orders declaring that Mr Hughes had engaged in misleading or deceptive conduct in connection with the offering for sale and the sale of the contraceptives. He granted injunctions limiting the basis upon which Mr Hughes could make such offers in future. 2 On 29 April 2004, Conti J found that Mr Hughes had breached the injunctions in respect of sale of contraceptives into the United States and in respect of offering the contraceptives for sale both within the United States and Australia without including various statements, both as to price and health risks mandated by the injunctions granted by Allsop J. His Honour made a number of orders by way of declarations and injunctions. He sentenced Mr Hughes to a term of imprisonment for six months, of which two months was to be served immediately and the balance of four months to be suspended subject to Mr Hughes' compliance with the injunctions previously issued by Allsop J. 3 Mr Hughes now appeals against the orders made by Conti J. He has raised four areas of appeal. One relates to procedural fairness, and another to the impossibility of compliance with orders made by Conti J relating to the transfer of a domain name to the ACCC. A third area of challenge raises the question whether he did, as Conti J found, 'sell' contraceptives to an ACCC officer posing as a prospective purchaser, there having been no delivery of any contraceptives to that officer. The fourth area of challenge relates to the applicability of various provisions of the Trade Practices Act 1974 (Cth) (the Act) to his conduct and seeks, in effect, to go behind the judgment of Allsop J. 4 Mr Hughes' complaint in relation to procedural fairness is that Conti J did not have regard to a large number of affidavits which he had wanted to rely upon in the case. We are satisfied upon an examination of the transcript of the proceedings before Conti J, that in fact he elected to give his evidence orally rather than rely upon the affidavits. In any event, Conti J did consider the contents of the affidavits but found all the relevant facts to be effectively undisputed. For these reasons, elaborated below, we are satisfied that there was no procedural unfairness as claimed by Mr Hughes. 5 In respect of orders made by the learned trial judge requiring transfer of a domain name said to be registered in favour of Mr Hughes to the ACCC, we are satisfied that there was no basis upon which such an order could properly have been made. There was no evidence of any Register or any capacity to make a transfer as directed. The website address specified in the order does not appear to answer the description of a domain name. The orders relating to the transfer of the domain name were set aside by consent at the hearing of the appeal after these difficulties emerged. 6 As to the finding by the learned trial judge that Mr Hughes had sold contraceptives to an officer of the ACCC in contravention of the conditions imposed on such sales by the orders of Allsop J, we are satisfied that no 'sale' took place. In effect, what happened was that the officer, posing as a purchaser, ordered contraceptives through the Internet. Mr Hughes debited his credit card, apparently in the belief that he was a credit card fraudster, and delivered no contraceptives to him. Instead he sent him a balloon and a postcard through the mail. The order having been for unascertained goods and the goods never having been appropriated to the sale, there was no sale and no breach of that aspect of the orders made by Allsop J. For those reasons, elaborated below, the declaration that Mr Hughes sold contraceptives to the ACCC officer in contravention of the orders made by Allsop J will be set aside. 7 The fourth area of challenge related to the applicability of the Act. As noted above, this sought to go behind the judgment of Allsop J. No appeal was taken against that judgment. The Orders made by his Honour remained valid and enforceable at all times. We would not entertain a challenge to them by reference to questions relating to the applicability of the Act. 8 The factual basis upon which the learned primary judge imposed a term of imprisonment on Mr Hughes is not affected by the findings that we made in relation to the question of sale, nor is it affected by the orders that we have made in relation to the setting aside of the orders dealing with transfer of the domain name. 9 However, the setting aside of the declaration that Mr Hughes contravened the restrictions on 'sale' by Allsop J does require reconsideration of the penalty imposed on him. We are of the opinion that the penalty was substantially appropriate having regard to the findings of fact upon which it was based. However, we do not consider it appropriate that Mr Hughes be indefinitely subject to a suspended sentence of four months in prison. Indeed we consider that as a general rule a suspended sentence should only be suspended for a fixed term. We will vary the term of imprisonment by limiting the period within which Mr Hughes is subject to the suspended sentence to a period of two years. The Original Declaratory and Injunctive Orders against Mr Hughes 10 On 18 March 2002, Allsop J made declaratory and injunctive orders against Richard David Hughes in connection with contraventions of ss 52 and 53 of the Act. The contraventions arose out of the use, by Mr Hughes, of a website called 'Crowded Planet' to offer oral contraceptives for sale and supply. Representations on the website associated with the domain name, www.crowded.org were identified in the first declaration as follows: '(a) Crowded planet could supply newer oral contraceptives at lower prices resulting in consumers saving money. (b) users of the contraceptive Microgynon AE 50 ED - 'Can miss one', and (c) the use of Noriday AE 28 has 'Nil side effects'.' 11 The first order declared that the making of the representations in (a), (b) and (c) above was misleading or deceptive conduct in contravention of s 52 of the Act. The second order declared that the representation in (a) was false or misleading with respect to the price of the oral contraceptives on offer and constituted a contravention of s 53(e) of the Act. The third order declared the making of the representations in (b) and (c) above to be a contravention of s 53(c) of the Act by representing that the contraceptives Microgynon AE 50 ED and Noriday AE 28 had performance characteristics, uses or benefits that they did not have. 12 The fourth declaration was to the effect that the publication of the advertisements was misleading or deceptive in that it was made without the inclusion of the following information: '(a) that it is illegal for Crowded Planet to supply oral contraceptives listed on the site, …, to persons in Australia without a prescription; (b) that there are significant health risks in taking some oral contraceptives without first obtaining medical advice about the suitability of those medications for use by the particular individual; (c) that within Australia free medical assistance, including where appropriate the issuing of a prescription, is available to Australian citizens and permanent residents who are contemplating using oral contraceptives; (d) that it is significantly less expensive to obtain oral contraceptives upon prescription from a pharmacy in Australia than it is to buy them from the respondent; (e) that it is illegal for Crowded Planet to supply oral contraceptives listed on the site, … in the United States; (f) that it is illegal for Crowded Plant to supply "Norlevo" in Australia; and (g) that it is illegal for a person to acquire the oral contraceptives listed on the site,…, in Australia without a prescription.' 13 Allsop J also made injunctive orders as follows: '5. The respondent be restrained, by himself, his servants, agents or otherwise howsoever, from offering for sale and/or selling and/or supplying oral contraceptives in Australia, without disclosing in relation thereto in any promotional medium used by the respondent including any internet site, in clear readable type of at least font size 20 in Times New Roman:

a) that it is illegal to supply the oral contraceptives Microgynon 50 ED, Loette, Levlen ED, Triquilar ED, Logynon ED, Norimin 28 day, Brenda 35 ED, Marvelon 28, Femoden ED, Microval, Noriday 28 day, Diane - 35 and Norlevo to persons in Australia without prescription;

b) that it is illegal for a person to acquire the oral contraceptives Microgynon 50 ED, Loette, Levlen ED, Triquilar ED, Logynon ED, Norimin 28 day, Brenda 35 ED, Marvelon 28, Femoden ED, Microval, Noriday 28 day, Diane - 35 and Norlevo in Australia without a prescription;

c) that there are significant health risks in taking some oral contraceptives without first obtaining medical advice about the suitability of those medications for use by the particular individual;

d) that within Australia free medical assistance, including where appropriate the issuing of a prescription, is available to Australian citizens and permanent residents who are contemplating using oral contraceptives; and

e) that it is significantly less expensive to obtain oral contraceptives upon prescription from a pharmacy in Australia than it is to buy them from the respondent. 6. The respondent be restrained, by himself, his servants, agents or otherwise howsoever, from offering for sale and/or selling and/or supplying the oral contraceptives in Attachment "A" to persons in the United States of America.' Mr Hughes was ordered to pay the ACCC's costs of the application. The Charges 14 On 24 September 2003 the ACCC filed a motion in which it sought findings that Mr Hughes was guilty of contempt in the following ways: '1. The Respondent is guilty of contempt of Court in that in breach of Order 6 made by his Honour, Justice Allsop on 18 March 2002, the respondent:- (a) From on or about 28 February 2003 offered for sale the following oral contraceptives to persons in the United States of America:- (i) Microgynon 50 ED, Levlen 30ED, Loette, Logynon ED, Triquilar ED, Diane 35ED, Marvelon 28, Femoden ED, Norimin 28 500/35, Norimin 28 1000/35, Microval 28, Noriday 28 and Norlevo. (b) On or about 27 March 2003 sold Levlen ED to a person in the United States of America, Marc Griswold using the name Michelle Dorsey of Baltimore Avenue, Laurel, Maryland. (c) On or about 14 April 2003 supplied Levlen ED to a person in the United States of America, Marc Griswold using the name Michelle Dorsey of Baltimore Avenue, Laurel, Maryland. 2. The Respondent is guilty of contempt of court in that in breach of Order 5 made by his Honour Justice Allsop on 18 March 2002 the respondent- '(a) From on or about 28 February 2003 offered for sale oral contraceptives in Australia, without disclosing in relation to that offer, in a promotional medium used by the Respondent, namely the World Wide Web site on the internet at http://www.users.bigpond.com/dilipili/ in clear readable type of at least font size 20 in Times New Roman: (i) that it is illegal to supply the oral contraceptives Microgynon 50ED, Loette, Levlen ED, Triquilar ED, Logynon ED, Norimin 28 day, Brenda 35 ED, Marvelon 28, Femoden ED, Microval, Noriday 28 day, Diane - 35 and Norlevo to persons in Australia without prescription; (ii) that it is illegal for a person to acquire the oral contraceptives Microgynon 50 ED, Loette, Levlen ED, Triquilar ED, Logynon ED, Norimin 28 day, Brenda 35 ED, Marvelon 28, Femoden ED, Microval, Noriday 28 day, Diane - 35 and Norlevo in Australia without a prescription; (iii) that there are significant health risks in taking some oral contraceptives without first obtaining medical advice about the suitability of those medications for use by the particular individual; (iv) that within Australia free medical assistance, including where appropriate the issuing of a prescription, is available to Australian citizens and permanent residents who are contemplating using oral contraceptives; and (v) that it is significantly less expensive to obtain oral contraceptives upon prescription from a pharmacy in Australia that it is to buy them from the respondent.' (b) On or about 2 April 2003 sold Levlen 30ED to Jeremy Roach using the name Susan Roach in Australia without disclosing in relation to that sale, in a promotional medium used by the Respondent, namely the World Wide Web site on the internet at http://www.users.bigpond.com/dilipili/ in clear readable type of at least font size 20 in Times New Roman: [the same statements as are set out in (1) to (v) above].' 15 The ACCC moved that Mr Hughes be punished for contempt and sought injunctive orders in relation to the transfer of a website to the ACCC and for the placement of corrective notices on the website. The Orders Appealed Against 16 On 29 April 2004, after a hearing Conti J found Mr Hughes to have been guilty of contempt of the Court by breaching the injunctive orders 5 and 6 made by Allsop J. His Honour made declaratory orders relating to the contempts, ordered that Mr Hughes be imprisoned for a period of six months, four months of which was to be suspended, and made injunctive orders which are set out below. 17 His Honour made declarations that Mr Hughes was in contempt of Court and did so in the terms sought in the ACCC's motion (Orders 1 and 2). He directed in Order 3 of his orders that Mr Hughes be imprisoned for a period of six months commencing from 29 April 2004, the first two months of which was to be served in any event. In Order number 4 his Honour provided for suspension of the balance of the sentence in the following terms: 'The balance of the above sentence of six months shall be suspended from execution upon the basis however that if the respondent hereafter breaches Order 5 or Order 6 the subject of the foregoing declaratory relief, that provision for suspension shall be deemed to so operate to the effect that the respondent must thereupon be imprisoned for at least the remainder of the six month period not served, namely that residual period of four months.' The Orders 5 and 6 referred to in the preceding order are the Orders 5 and 6 made by Allsop J on 18 March 2002. Conti J then made the further following orders: '5. (a) The respondent Richard David Hughes be further ordered to transfer the registration of the domain name in respect of the CrowdedPlanet website being http://www.users.bigpond.com/dilipili/ ('the domain name') to the applicant Australian Competition and Consumer Commission ('the Commission') within fourteen days of the date of this order. (b) The respondent Richard David Hughes take all such steps, perform all such acts and sign all such documents as may be reasonably required of him by the Commission within fourteen days of the date of this order, in order to effect the transfer of the registration of the domain name to the Commission. 6. If the respondent does not: (a) transfer the registration of the domain name to the Commission within fourteen days of the date of those orders; or (b) otherwise take all such steps, perform all such acts and sign all such documents as may be reasonably required of him by the Commission within fourteen days of the date of these orders to effect the transfer of the registration of the domain name to the Commission the Commission is hereby authorised pursuant to Order 37 rule 3 of the Federal Court Rules to take all such steps, perform all such acts and sign all such documents as may be required to enable the registration of the domain name to be transferred to it. 7. Upon the transfer of the registration of the domain name to the Commission, the Commission may place on the worldwide web at a site accessed through the domain name a notice in accordance with the provisions of Schedule 'A' to these orders. 8. The respondent pay the Commission's costs of and incidental to this application. 9. Either party have liberty to apply to the Court on seven days' prior notice in writing given to the other party in relation to the implementation or carrying into effect of the above orders.' Grounds of Appeal 18 Mr Hughes instituted an appeal against the decision of Conti J on 21 May 2004. On 20 October 2004, he filed an amended notice of appeal. Leave to amend the notice accordingly was given at the hearing of the appeal. The notice of appeal set out some matters reflecting public policy positions and objectives held by Mr Hughes. The substantive questions it raised, which are amenable to consideration by the Full Court, may be summarised as follows:

1. Whether Conti J declined to read affidavits and submissions filed by Mr Hughes in the contempt proceedings and so denied him procedural fairness (ground 5).
2. Whether Orders 5 and 6 made by Conti J were incapable of being complied with as applying to a website which was not a registered domain name (ground 10).
3. Whether Mr Hughes, as alleged, sold any contraceptives to Mr Jeremy Roach posing as Susan Roach (ground 4).
4. Whether the provisions of the Act relied upon at first instance were applicable to a sole trader and whether the Act applies extra-territorially (grounds 6 and 7). The Procedural Fairness Ground 19 Mr Hughes filed various affidavits in the proceedings before Conti J. They were not reproduced in the appeal book. The transcript of the proceedings before Conti J indicates the following references to the affidavits filed by Mr Hughes:
5. Conti J referred to notices of motion filed by Mr Hughes and affidavits filed in support of the notices. He told Mr Hughes that while he had read 'a lot of the material' which he had sent to the Court he had not looked at the motions or affidavit material in support of the motions as the motions lacked any legal viability or significance. By this we take it his Honour meant that he had not, at that point, given any deep consideration to the material.
6. In Mr Hughes' cross-examination of ACCC witness Wayne Matelski from the United States, Mr Hughes referred to his 'affidavit 8' and an aspect of that on which he wanted to cross-examine.
7. Mr Hughes referred to a statement by the Chairman of the ACCC about the volume of complaints received by that body which was mentioned in one of his affidavits. Mr Hughes wanted to cross-examine on whether any member of the public had been hurt by his conduct.
8. In cross-examination of ACCC witness, Ellis, Mr Hughes referred to a statement in another of his affidavits that his sales for the past three years had been 'miniscule'.
9. Mr Hughes referred to a statement in a notice of motion which he had filed that he would agree to cease 'all dreams and activities in any way related to selling oral contraceptives to anyone over the internet…'. The preceding references all emerged during the ACCC's case. 20 After the ACCC closed its case his Honour said to Mr Hughes: 'All that I need to hear from you today is in relation to any evidence that you wish to give yourself or any documents you wish to produce.' His Honour then referred to eight affidavits and accompanying exhibits which had been filed by Mr Hughes. He said: 'Now, it's a matter for you as to which, if any, of those affidavits you wish to rely upon or whether you would prefer to just go in the witness box and tell your own story and put the affidavits aside; it's a matter as to the approach you're prepared to take. I have to say to you a lot of the affidavit material you have prepared really doesn't bear on the issues arising. That is understandable and, as I say, you're not a lawyer and people without legal training haven't got a grasp of what are the critical issues to be usually involved in what we call the justiciable issues that are involved in litigation. You can take the course of saying, well, that may be so but my case is in my affidavits or one or more of them and you can identify which ones and you rely upon those and all that material. You can then sit down and say, that's what I rely upon, or you can supplement it by something you would wish to say by going into the witness box. … So you take the course you would like to take.' After further exchange his Honour went on: 'All I want to hear from you this morning is evidence. Now, if you say to me, well look, I wish to rely upon, and perhaps it might be preferable if we, in the first place, identify which affidavits you rely upon and if we turn those open, if we go for instance to tab 20 can you tell me whether you will rely on that affidavit. We'll just do them one by one and I'll take the affidavit as read. I will assume, Mr Williams, that you have objected to the admissibility of each of these affidavits both in form and in relevance.' Mr Williams SC, who appeared for the ACCC, confirmed that he objected. 21 His Honour then turned to Mr Hughes' first affidavit of 12 November 2003 and asked him whether he wished to rely upon that affidavit. Mr Hughes said: 'I just feel I am wasting the court's time. There's a couple of points that I just wanted to make and if they're worth making perhaps we can find where I have spoken about them in the affidavits. Would that be all right?' His Honour told him to go ahead. Mr Hughes began to address the Court. Counsel for the ACCC pointed out that what was being said was evidentiary and should be given from the witness box. His Honour told counsel to leave it to his discretion as he would like Mr Hughes to keep going for the moment. 22 Mr Hughes then further addressed his Honour. He referred to the print size specified in the orders of Allsop J. This evidently related to his capacity to comply with all of the directions made by Allsop J in respect of notices to be placed on the website. He said the requirement that the print size be 'not less than point size 20' was not a fair print point to use in connection with websites. He referred to the United States Federal Drug Agency Personal Use Policy. His Honour then stopped him and said: 'Yes. I think, having listened to what you've said so far, I think this really, this material must be given in the witness box.' Mr Hughes agreed. He was then sworn. He deposed to the truth of what he had already said to the Court from the bar table by way of his explanation for non-compliance with certain aspects of Allsop J's orders. There followed lengthy testimony about various aspects of the orders made. His Honour then said: 'Is there anything else you wanted to add, Mr Hughes? You have covered the field, I think, of the orders which appear in Allsop J's order of 18 March 2002.' Mr Hughes addressed his Honour further from the witness box and was then cross-examined by Mr Williams. 23 In the course of cross-examination by Mr Williams, Mr Hughes said that somewhere in his affidavits he said that he did have old supplies of the contraceptive Levlen but obtained fresh Levlen and sent a box of the freshest material to the apparent client Mr Griswold from the United States. 24 Counsel for the ACCC referred Mr Hughes to a statement in his affidavits that he was not in control of the web site designated 'dilipili'. At the end of Mr Hughes' cross-examination his Honour adjourned for a short time and then had some discussions with counsel and Mr Hughes on the basis that final addresses would take place on the following day. On the following day, 7 April 2004, Mr Hughes was further cross-examined by counsel. He was then asked whether he was prepared to admit the truth of a statement of certain facts tendered by counsel for the ACCC. He accepted that the relevant witness, a pharmacist, Mr McNeilly, need not be called. 25 A discussion about Mr Hughes' affidavits ensued. Conti J asked counsel for the ACCC whether he was happy for the material to be before him subject to relevance. Counsel stated his understanding that Mr Hughes' oral evidence was essentially intended to supersede the affidavits. Mr Hughes tendered one attachment as a character reference. Counsel for the ACCC had no objection to that tender. That document became exhibit number R2. 26 His Honour then said: 'Mr Hughes, I know that, of course, you have presented to the Court this large number of affidavits. Understandably as, of course, you are not a qualified person, a vast amount of this material would be strictly inadmissible. I think that I should not regard the material that is before me except to the extent to which it has been addressed on the transcript. If there is anything in particular that - any document in particular that you wish to put before me which would have some bearing on the issues, then a tailored application would do the same, but Mr Williams recall does coincide with mine, namely, that the object of you giving that evidence yesterday was to cover the field, as it were, of what you wanted to say.' Mr Hughes took no objection to that statement. The matter moved on to final addresses. The first address was given by Mr Williams. There was reference to a large bulk of material which had been submitted by the ACCC. Conti J said he had glanced through that material and sought confirmation to the effect that he need have regard only to those aspects of it to which counsel for the ACCC had provided references. He said that the ACCC could not expect him to spend days, if not weeks, wading through a huge amount of history to try and turn on to those matters and then record them in the judgment on the basis that they were proved facts. 27 It is apparent from all of this that Mr Hughes was given a full opportunity to put his case orally and that, in the event, albeit by a somewhat convoluted process, he did so and did not press the tender of any of his affidavits. In our opinion there was no procedural unfairness in relation to the treatment of his affidavit material. 28 In his reasons for judgment on 29 April 2004, his Honour referred to Mr Hughes' notices of motion. Mr Hughes' response to the contempt proceedings had been to raise a number of issues in the nature of challenges to the viability of the ACCC's causes of action which had been presented against him from the outset of the proceedings. These issues were raised through the notices of motion which Mr Hughes had faxed to the Court but not formally filed. His Honour treated the faxed material as formally filed. One of the notices of motion raised issues of a constitutional nature. A second notice of motion required an ACCC witness to provide certain documents and information. A third notice of motion appeared to be by way of response to the affidavit of another ACCC witness Mr Matelski and required him to provide information regarding oral contraceptive pills on sale in the United States and to disclose his history of employment by pharmaceutical and drug companies. A fourth notice of motion appealed to the Court to comprehend Mr Hughes' endeavours as a sole trader to trade 'in the globalised marketplace using the internet and email'. This was the motion which contained the offer to 'cease and desist all dreams and activities in anyway related to selling oral contraceptives to anyone over the Internet'. It was conditioned upon a donation by the ACCC of a sum equal to their costs to be used to create birth control and family planning clinics in East Timor and/or West Iran and/or Papua New Guinea and/or the Solomon Islands. 29 His Honour observed that Mr Hughes had provided to the Court eight affidavits in relation to the matters raised by his motions. Only one of them bore the signature of a Justice of the Peace, but all but one had been signed by Mr Hughes. His Honour said: 'The material is largely an attempted, but radically misconceived, and at times defiant, explanation of his conduct complained of by ACCC.' 30 Nothing in this consideration of the material, which was not received as part of the evidence before his Honour, discloses any procedural unfairness. The Practicality of the Domain Name Transfer Orders 31 In the course of making submissions to his Honour about the proposed transfer of the 'domain name' referred to in Orders 5 and 6, which were made by his Honour in aid of the contempt orders, Mr Hughes said: 'To the best of my knowledge, dilipili is not a registered domain name. There are registries of domain names, both in Australia and America and in other countries. Dilipili was just a user name. Telstra Bigpond used a security for changes to that user name and the user name's website - a person's credit card. The credit card is my credit card.' 32 The 'domain name in respect of the CrowdedPlanet website' referred to in Order 5 made by his Honour did not in fact appear to be a domain name at all. Mr Hughes had previously had a domain name, which was mentioned in the first declaration made by Allsop J on 18 March 2002. The tree structure of domain names and the way in which they are organised was referred to in [6] to [21] in the judgment of French J in Nominet UK v Diverse Nominet Pty Ltd [2004] FCA 1244. It appears that what is referred to in par 5 of the Orders made on 29 April 2004 was a user name 'dilipili' used by Mr Hughes as a client of the Telstra Bigpond service in which Telstra is the relevant provider. There was no evidence to suggest that there was any 'register' upon which the name referred to in par 5 of the Orders appeared or that it was capable of transfer as directed. 33 Following the delivery of the judgment on 29 April 2004, Mr Hughes sent a facsimile message asserting that Orders 5 and 6 of the Orders made by his Honour could not be complied with. In his facsimile he said that the relevant domain name was and that it was owned by Telstra and registered with a United States domain name registry. That name with the word '/dilipili' added was purely an extension to the domain name and was also 'owned by Telstra'. He complained that he was in a catch 22 situation. Because it was impossible to comply with Orders 5 and 6 he feared he would automatically suffer an extra four months prison after fourteen days. This was evidently based upon a misreading of Order 4 which referred to compliance Orders 5 and 6 made by Allsop J. 34 In supplementary reasons published on 3 May, Conti J said (at [2]): 'It is not my intention that Orders 5 and 6 [of the Orders made by Conti J] should operate, nor do I think that the same do operate, so as to place Mr Hughes in contempt or disobedience, in the event that it is in fact impossible for him to effect a transfer of the domain name to the Australian Competition and Consumer Commission (ACCC) for technical reasons. What is intended by those Orders, as I think my Reasons already reflect, is that Mr Hughes should sign any such authority and take such other steps as may be reasonably required of him for that purpose. If notwithstanding Mr Hughes' co-operation appropriately with the ACCC within the terms and requirements of Order 5, the domain name cannot be effectively transferred for some technical reason, Mr Hughes would clearly not be in default of Order 5. In that event, the ACCC would need to rely upon the terms of Order 6, to the extent that the same may conceivably be effective for the purpose for which Order 6 was framed by the ACCC in the first place.' 35 In the course of argument, counsel for the ACCC conceded that Orders 5, 6 and 7 should be set aside. The Court made those orders at the hearing of the appeal. The Alleged Sale of Contraceptives to Jeremy Roach Posing as Susan Roach 36 Mr Hughes asserted in his amended notice of appeal that he did not sell any contraceptives in Australia in breach of the orders made by Allsop J. He said what he actually sold were balloons. To understand this contention it is necessary to have regard to the evidence and findings at trial by Conti J. 37 Relevantly to this ground, the ACCC adduced at trial affidavit evidence sworn on 29 October 2003 from Jeremy Roach, an employee of the ACCC who holds the position of Assistant Director, Electronic Investigations Unit. On 1 April 2003, he accessed the CrowdedPlanet website using an office computer and scrolled to an order form. He completed required details on the order form using the name Susan Roach and ordered a four month supply of Levlen 30ED at a price of US$55. He submitted the order by clicking on the 'Place Order' button at the bottom of the order form. This had the effect of sending an email being the order for Levlen 30ED to the relevant email address. An order confirmation page was displayed. Later on the same day he realised a mistake had been made and sent a further email to the correct contact email address. He received an email response with the signature block in the name of David Z Hughes. He responded to that email on the following day, 2 April 2003. 38 On 7 April 2003, Mr Roach checked the post office box assigned to the Electronic Investigations Unit and saw a postpac addressed to Susan Roach. When he opened it he found a receipt for US$55, a balloon, and a piece of paper with printing on it. The Court was informed at the hearing that the balloon was produced by an organisation promoting wind power as a response to possible climate change. 39 In cross-examination, Mr Hughes told the Court that he had charged Mr Roach US$55 which was the price posted for Levlen. He denied that he was aware from the outset that the order had been placed by a government agent. He said that any Australian customer who tried to order from the dilipili website was given the warning that he said he gave Susan Roach that it was cheaper to buy contraceptives with a prescription in the normal way. The following exchange then occurred. 'Q. I will ask you quite a simple question, if I may. You don't dispute that Jeremy Roach, using the name Susan Roach, ordered Levlen ED from you over the website? A. I don't dispute that. Q. You don't dispute that you charged the credit card, the details of which he supplied, with the US$55 that was the indicated price for Levlen. A. Yes by way of punishing him for lying. Q. At the times to which the charges were laid you operated the dilipili website? A. Yes I did.' In explanation to this Court at the appeal, Mr Hughes said he suspected that 'Susan Roach' was a credit card fraudster which is why he sent a balloon and a 'postcard' to her. He told this Court at the appeal hearing that the order was placed by email. He said '… I didn't say this but I think this is in an affidavit - I honestly thought it was a stolen credit card.' He said he had referred the card to a bank as a possibly stolen credit card and 'I charged the $55 because that was my way of flushing out the quail if you like.' If the person ordering was 'dodgy' he would expect to hear nothing more about them. Mr Hughes was asked by the Court whether this explanation had appeared in his affidavit evidence beyond the oral evidence he had given. He said that there was mention in his affidavit evidence about ' what you should do when you suspect you have a stolen credit card'. It is the fact however, that Mr Hughes did refer in his oral evidence to punishing 'Susan Roach for lying' and did not elaborate or draw attention to any other explanation. 40 In relation to the alleged sale to Jeremy Roach in contravention of the injunctions ordered by Allsop J, the evidence referred to by his Honour was described in his judgment, as an affidavit of: 'Jeremy Craig Roach, an ACCC Investigator, sworn 29 October 2003; his testimony was of an entrapment nature, and related to an offer to supply, though not any subsequent actual supply; he was cross examined in some detail by Mr Hughes.' 41 His Honour made no precise finding in relation to the evidence of Mr Roach but said (at [24]): 'It is I think sufficient to summarise that Mr Hughes conceded in substance, in the course of his cross-examination, or virtually so, his disobedience to and infringement of the orders of this Court, albeit that he tended to do so in protracted and sometimes convoluted detail. Mr Hughes' acceptance of his infringements of the Orders of the Court included reference to the orders of Tamberlin J as well as those of Allsop J, in the former case at least until the latter orders took effect. In circumstances where Mr Hughes could not recall previous statements of fact or intention on his part, to which his attention was drawn, Mr Hughes readily accepted the cross-examiner's assertion as to the contexts and the texts of such statements.' 42 It appears clear from the evidence that it was not contested that Mr Roach had responded to the advertisement on the CrowdedPlanet website, that he had submitted an order for the Levlen contraceptive with a credit card authority in the amount of US$55 and that he was supplied not with Levlen but with a postcard and a balloon. His Honour said (at [32]): 'Senior counsel for the ACCC, Mr Williams SC, rightly submitted that in the light of Mr Hughes' evidence given at the hearing, it was not in contest that Mr Hughes breached each of the orders in the way and to the extent alleged by ACCC as set out in the Amended Statement of Charge (see [3] and [4] above), Mr Hughes having substantially admitted and not contested those breaches. Even without the admissions and concessions proffered by Mr Hughes, the ACCC's case was positively established in all material respects…' 43 The charge, in the ACCC motion, which expressly related to Jeremy Roach, was that set out in par 2(b) of the motion. It alleged a sale of contraceptives to Mr Roach posing as Susan Roach. The evidence before his Honour did not establish the supply of any contraceptives to Mr Roach. His Honour was aware of this because he referred to Roach's affidavit as relating to 'an offer to supply though not any subsequent actual supply'. 44 His Honour's global finding that all the allegations set out in the ACCC motion had been made out, incorporated by reference, a finding that Mr Hughes had sold contraceptives in Australia to Mr Roach in contravention of the injunctions granted by Allsop J. This was reflected in the declarations that his Honour made which included a declaration, in terms of the ACCC motion, that on 2 April 2003 Mr Hughes had 'sold' Levlen 30ED to Mr Roach. 45 Counsel for the ACCC submitted that on ordinary principles a contract of sale had been concluded and therefore a sale even if no supply occurred. This requires consideration of the 'ordinary principles' which are applicable to characterisation of transactions as sales or mere agreements for sale. The Sale of Goods Act 1923 (NSW) distinguishes, as do the like Acts in all other States and Territories, between 'an agreement to sell' and a 'sale' (s 6(3)). Where, under a contract of sale, the property in the goods is transferred from seller to buyer the contract is called a 'sale'. Where a transfer of property is to take place at a future time the contract is called 'an agreement to sell'. An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred. 46 Section 23 of the Sale of Goods Act (NSW) sets out, as do like statutes in other Australian jurisdictions, rules for ascertaining the intention of parties as to the time at which property will pass. These rules are subject to the qualification that a different intention may appear. Rule 5 provides for the case of a contract for the sale of unascertained goods. When goods of that description are unconditionally appropriated to the contract either by the seller with the assent of the buyer or by the buyer with the assent of the seller '… the property in the goods thereupon passes to the buyer'. Delivery without reservation is deemed appropriation. 47 The order placed by Mr Roach, posing as Susan Roach, was for a quantity of oral contraceptives under the generic description Levlen. There is no suggestion that the order related to any particular batch at the time that Mr Hughes accepted the payment. Nor is there any evidence that he identified a particular batch for delivery to Mr Roach, in fact the evidence is to the contrary. Consistently with 'ordinary principles' reflected in the Sale of Goods Acts the property in the goods to be supplied would not have passed before their appropriation for supply. There was no evidence of any such appropriation and therefore no evidence of a sale within the meaning of the Acts. 48 In some statutes an extended definition is given for the word 'sell'. In the Controlled Substances Act 1984 (SA) under which Mr Hughes was evidently charged with unlawful possession of prescription drugs, the word 'sell' is defined to include 'offer or expose for sale'. Given his Honour's use of the words 'offer for sale' and 'sell' in his injunctive orders and the need for precision in the construction of injunctions, there is no warrant for extending the ordinary meaning of 'sell' to encompass 'offer for sale'. 49 The prohibition in Order 5 of the Orders made by Allsop J on 18 March 2003, so far as they relate to the sale of oral contraceptives in Australia, should be construed in accordance with the long established meaning of that term in the Sale of Goods Acts. On that basis there was no sale within the meaning of the injunctions issued by Allsop J. That is to say Mr Hughes did not sell the goods. Nor was there any sale according to the relevant ordinary English meaning of the word 'sell' - 'make over or dispose of (a thing) to another in exchange for money', Shorter Oxford English Dictionary, 5th Edition (2002). There were no goods identified, there was no delivery either intended or effected. In the circumstances, the declaration made in par 2(b) of the orders made by the learned primary judge that Mr Hughes, on or about 2 April 2003, sold Levlen 30ED to Jeremy Roach without making the requisite disclosures in relation to that sale, must be set aside. The Applicability of the Relevant Trade Practices Act Provisions 50 The grounds relating to this aspect of Mr Hughes' appeal essentially sought to challenge the basis upon which the original orders by Allsop J had been made. In our opinion it was not open to Mr Hughes to raise these issues in the context of an appeal against the Orders made by Conti J. The Orders made by Allsop J were in force at the time of the contravening conduct. Even if they were to have been subsequently set aside on appeal, the contravening conduct would still have constituted a breach of the Orders and a contempt of the Court. The Court is, by virtue of s 5(2) of the Federal Court of Australia Act 1976 (Cth) a superior court of record. Its orders remain valid and enforceable unless and until set aside - Matthews v Australian Securities and Investments Commission (2000) 97 FCR 396 at [20] and [24] and the authorities there cited. The Effect on Penalty 51 The setting aside of the declaration that Mr Hughes sold oral contraceptives to Mr Roach in contravention of Allsop J's orders does not materially alter the factual basis upon which the learned primary judge dealt with the question of penalty. His Honour was well aware, as reflected in his references to the evidence, that there had in fact been no supply to Mr Roach. Nevertheless the setting aside of the specific finding of contempt does allow for a reconsideration of the appropriate disposition by way of penalty. It is helpful first to reflect upon the power that the Court has in respect of penalties. 52 The power of the Court to punish contempts of its powers and authority is conferred by s 31 of the Federal Court Act: '(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.' By s 24 of the Judiciary Act 1903 (Cth), the High Court has '... 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'. At the commencement of the Judiciary Act the Supreme Court of Judicature in England could impose penalties for civil and criminal contempts. In upholding the power of the Federal Court to impose fines for wilful breaches of its orders, the majority judges in the Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 115 said: 'Contempt of court is a distinctive offence attracting remedies which are sui generis:...' Their Honours referred to Morris v Crown Office [1970] 2 QB 114. In that case, Lord Denning MR, at 125 referred to the common law power of the High Court in England to commit a person to prison for criminal contempt saying: 'The powers at common law remain intact. It is a power to fine or imprison, to give an immediate sentence or to postpone it, to commit to prison pending his consideration of the sentence, to bind over to be of good behaviour and keep the peace, and to bind over to come up for judgment if called upon. These powers enable the judge to give what is, in effect, a suspended sentence.' See also: Lee v Walker [1985] 1 All ER 781 at 783-784 in which the common law power of the High Court to suspend a sentence of imprisonment was reasserted. The 'suspended sentence' in that case was in the form of an order of committal made subject to a direction that it 'should lie in the office for a stated time and should not issue if the contemnor within that time complied with stated conditions' (at 784). An order in that form was made by Drummond J in Australian Securities Commission v MacLeod (No 3) (1993) 40 FCR 475, albeit it was for the purpose of allowing the contemnor to exercise his appeal rights. 53 In his decision in Australian Competition & Consumer Commission v Goldstar Corp Pty Ltd [1998] FCA 1441, Drummond J relied upon Morris v Crown Office and Lee v Walker for the proposition that the Court has 'power, in addition to the power to impose a sentence of imprisonment for contempt of court, to suspend any such sentence on conditions' (at 2). In that case his Honour ordered that the contemnor be imprisoned for a period of two months but further ordered (at 2): '... that a warrant for his committal to prison issue, but that that warrant lie in the Registry to the intent that it not be executed, provided that, Mr Hudson refrains by himself from contravening any of the provisions of Part V the Trade Practices Act 1974 (Cth) for two years, and that he also refrains from being knowingly involved in the contravention by anyone else of any of the provisions of Part V the Trade Practices Act for two years.' (sic) An appeal against that decision was dismissed sub nom, Hudson v Australian Competition & Consumer Commission [1999] FCA 891. 54 In Australian Securities and Investments Commission v Matthews (1999) 32 ACSR 404, Sackville J approved of what Drummond J had said in Goldstar about the power to suspend a term of imprisonment. In that case his Honour sentenced the contemnor to a term of imprisonment of two months suspended for 12 months on condition that he not contravene the orders in respect of which he had been found to be in contempt. Sackville J also made the following comment (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 [(1999) 99 ATC 5124] at para 34, imprisonment is a measure of last resort.' 55 The range of penalties available to the Court to punish for contempt was set out by Nicholson J in Australian Competition & Consumer Commission v INFO4PC.com Pty Ltd (2002) 121 FCR 24 (at [138]) as follows (omitting authorities): '... to: (a) 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; and (d) to order the sequestration of the assets of a contemnor; (e) to suspend on condition any sentence of imprisonment that it might impose in respect to contempt.' The authorities cited by his Honour for the power to suspend on condition, a sentence of imprisonment, were the decisions of Drummond J in Goldstar and Sackville J in Matthews referred to above. 56 The partial suspension of a term of imprisonment as ordered by his Honour in the present case, does not appear to have been adopted in any of the cases to which reference has been made. There are statutory sentencing regimes in place throughout Australia which expressly authorise such orders in the criminal courts. Section 112AP(6)(b) of the Family Law Act 1975 (Cth) authorises suspension of execution of committal orders on condition that the contemnor comply with specified terms. In our opinion, and absent any argument to the contrary in this case, there is no reason why the flexibility of the penalties available to the Court for contempt of its powers and authority should not accommodate an order of the kind made by his Honour. We are, however, firmly of the view that it is rarely, if ever, that an order should be made suspending the whole or part of a term of imprisonment for an indefinite period. There must come a time when a person who is the subject of a conditional suspension of a term of imprisonment is no longer exposed to that sanction. Even the suspended committal orders referred to in the English authorities appear to have contemplated that the committal order lie in the Registry for a time after which the contemnor would not be exposed to the risk of committal. 57 On the facts found by his Honour and having regard to the other breaches of the orders made by Allsop J, we would not interfere with his Honour's disposition by way of a six month term of imprisonment suspended as to four months. The breaches established in this case were wilful and flagrant and involved the offering for sale of oral contraceptives without mandated warnings relevant to issues of consumer protection and public health. Mr Hughes has now served the two months which were required by his Honour's Order. The sentence imposed by his Honour properly reflected the seriousness of the breaches. Nevertheless the setting aside of the finding as to a contravention of Order 5 of the Orders made by the Allsop J does require a reconsideration of the penalty. In our view the indefinite suspension of the balance of the term of imprisonment imposed upon Mr Hughes is not justified in the circumstances of this case. As stated above, it could rarely ever be justified. We would therefore vary his Honour's Order by limiting the suspension of the four month term or imprisonment to a period of two years from the time of the making of the Order by Conti J. Conclusion 58 For the preceding reasons the appeal is allowed in part. The declaration in Order 2(b) of the Orders made by the learned primary judge will be set aside. The Order number 4 made by the learned primary judge will be varied to read as follows: 'The balance of the above sentence of six months shall be suspended for a period of two years calculated from 29 April 2004 on the basis that if the respondent thereafter breaches Orders 5 or 6 of the Orders made by Allsop J on 18 March 2002, the respondent will, if a judge so directs, serve all or such part as the judge directs, of the remainder of the six month period not served.' 59 Having regard to the partial success of the appellant in this case there will be no order as to costs. 60 Mr Hughes was unrepresented at first instance and on the appeal. There was some evidence on the record which indicated that he suffers from bipolar disorder. He presented as an intelligent man but one whose ability to communicate coherently with the Court was impaired in a manner somewhat suggestive of that condition. It is a disquieting aspect of the case that he was not legally represented in circumstances in which the ACCC was calling for a much more substantial term of imprisonment than that which was imposed upon him. On the other hand he managed to make, in writing and orally, the substantial points on which he succeeded in his appeal notwithstanding that they were embedded in contentions and observations which were of little relevance to his case. I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Court.

Solicitor for the Respondent: Australian Government Solicitor