2009/291218 MINDSHARE COMMUNICATIONS LIMITED (TAIWAN BRANCH) v WAYNE GREGORY ECKETT
JUDGMENT
1 HIS HONOUR: This is a summons for contempt in which a declaration is sought that Mr Eckett has committed contempt of court together with an order that he be punished for such contempt by fine or some further order as the Court sees fit.
2 The summons is accompanied by a Statement of Charge in which it is alleged that Mr Eckett committed contempt of court by breaching an order made by the Court of Appeal on 10 March 2009 in the following terms:
"On 25 March 2009, the Registry of the New South Wales Supreme Court issued a sealed copy of the orders made by the Court of Appeal on 10 March 2009, as follows:
1. Orleans Investments Pty Ltd and Wayne Gregory Eckett are restrained from:
(a) referring directly or indirectly to the Respondent as a company which receives any bonus, rebate, volume discount or other financial benefit provided to media purchasing companies by media vendors or suppliers in respect of the media purchased by them ( Rebate ) in Taiwan or elsewhere in any document or other statement created or made by them;
(b) referring directly or indirectly to the Respondent in any document or other statement created or made by them which discusses or mentions or refers to Rebates in Taiwan or elsewhere; and
(c) directly or indirectly disclosing any information or making or publishing any statement or engaging in any conduct which may harm or injure the name or reputation of the Respondent or the name or reputation of any related body corporate of the Respondent (as defined in Sections 46-50 of the Corporations Law as at 3 May 2001),
except in so far as either or both of them publish a report in respect of any media audit of the Respondent for third parties or clients of either or both of them in accordance with clause 8 of the Deed of Release, a copy of which is set out in the Schedule, between the parties dated 3 May 2001."
3 The breaches are alleged to be constituted by emails sent by Mr Eckett on 1 November and 2 November 2009 together with a statutory declaration sworn by him on 11 September 2009 attached to each of the emails.
4 The Statement of Charge further alleges that the sending of the emails was contumacious in breach of the orders made by the Court of Appeal on 10 March 2009 in that it:
"(a) was a document and/or a statement which was created and/or made by Mr Eckett, which referred directly and/or indirectly to Mindshare as a company which received a bonus, rebate, volume discount or other financial benefit provided to media purchasing companies by media vendors or suppliers in respect of media purchased by them ( Rebate ) in Taiwan;
(b) was a document and/or a statement which was created and/or made by Wayne Gregory Eckett, which referred directly and/or indirectly to Mindshare, and which discussed and/or mentioned and/or referred to Rebates in Taiwan or elsewhere;
(c) directly and/or indirectly disclosed information, and/or made or published any statement, and/or constituted the engagement in conduct, which had the potential to harm or injure the name or reputation of Mindshare or the name or reputation of a related body corporate of Mindshare (as defined in Section 46-50 of the Corporations Law as at 3 May 2001); and
(d) was not a report in respect of any media audit of Mindshare published by for third parties or clients of Mr Eckett in accordance with clause 8 of the Deed of Release between the parties dated 3 May 2001."
5 The same allegations are made in respect of the statutory declaration.
6 In respect of each charge it is alleged that the contempt of court was contumacious.
ISSUE
7 When the matter came on for hearing before me on 15 November 2010 I was informed by counsel for Mr Eckett that the contempt is admitted in the terms alleged. Accordingly, the live issue between the parties which remains is the question of penalty. Both counsel indicated to me on 15 November that they wished to adduce further evidence relating to this matter and accordingly a timetable was agreed so that the matter could be resolved on the further hearing to take place on 17 December 2010.
BACKGROUND
8 This proceeding arises from a Deed of Release to settle proceedings commenced by Mindshare Communications Ltd (Mindshare) against Mr Eckett and Orleans Investments Pty Ltd (Orleans) in the Federal Court of Australia. Mindshare also commenced proceedings against Mr Eckett and Orleans in the Supreme Court of New South Wales.
9 On 3 May 2001 Mindshare, Mr Eckett and Orleans entered into a Deed of Release to settle those proceedings as a consequence of which Mindshare discontinued the proceedings.
10 The Deed of Release recites that at various times between August 1997 and August 1999 Eckett and Orleans were engaged to perform services for Mindshare and that proceedings had been commenced alleging breaches of contract and of s 52 of the Trade Practices Act 1974.
11 Clause 7 of the deed is a covenant by Eckett that neither he nor any Eckett entity will for any reason refer to Mindshare as a company which received rebates in Taiwan in any document or other statement or refer to Mindshare in any document which refers to rebates in Taiwan or elsewhere or make use of any information regarding any aspect of Mindshare's business, financial affairs or client and supply dealings.
12 Clause 10 is entitled "Non-disparagement by Eckett" and by clause 1 he undertakes to Mindshare not to directly or indirectly disclose information or engage in any conduct which may harm or injure the reputation or name of Mindshare or the name of any related body corporate of Mindshare including an entity known as WPP with the exception that Eckett was entitled to publish a report in respect of any media audit of Mindshare conducted for third parties or clients of Eckett.
13 Under clause 14 Mindshare agreed to pay to Orleans AUD$150,000 and to Carneys Lawyers a sum of AUD$40,000.
14 On 3 May 2001 as part of the settlement of the proceedings Eckett sent a letter to Mindshare in which Mr Eckett acknowledged that the litigation between Mindshare, Orleans and himself related to claims he had made to the effect that Mindshare Taiwan engaged in corrupt practices and breaches of its contractual duties by not disclosing to clients the rebates that it earns from the purchase of media in Taiwan. He noted that Mindshare has consistently denied the truth of these claims and he expressly accepted its denials and withdrew the claims and allegations that he had made.
15 In May and December 2004 he sent emails to clients of Mindshare disparaging of Mindshare to the two client recipients. This led to Mindshare filing a summons in the Supreme Court of New South Wales alleging that the emails constituted breaches of the Deed of Release and seeking restraining orders. Such orders were made by Hamilton J on 27 November 2007. In his judgment he emphasised the importance of clauses 7 and 10 of the Deed as imposing prescriptions on the parties making certain statements. The orders made by him were entered on 7 February 2008. There was an appeal to the Court of Appeal and on 10 March 2009 the Court of Appeal dismissed each of the grounds of appeal and made minor amendments to the orders made by Hamilton J at first instance. The orders of the Court of Appeal were entered on 25 March 2009. On 31 March 2009 Mindshare's solicitors sent a letter to Mr Eckett's solicitor enclosing a copy of the sealed orders made by the Court of Appeal.
AGREED FACTS
16 There is a statement of agreed facts which is as follows:
"1. On 27 November 2007, Justice Hamilton made the following orders:
The Court orders that:
1. Orleans Investments Pty Ltd and Wayne Gregory Eckett are restrained from:
(a) referring directly or indirectly to the Plaintiff as a company which receives any bonus, rebate, volume discount or other financial benefit provided to media purchasing companies by media vendors or suppliers in respect of media purchased by them ( Rebate ) in Taiwan or elsewhere in any document or other statement created or made by them;
(b) referring directly or indirectly to the Plaintiff in any document or other statement created or made by them which discusses or mentions or refers to Rebates in Taiwan or elsewhere; and
(c) directly or indirectly disclosing any information or making or publishing any statement or engaging in any conduct which may harm or injure the name or reputation of the Plaintiff or the name or reputation of any related body corporate of the Plaintiff (as defined in Section 46-50 of the Corporations Law as at 3 May 2001), including WPP,
except in so far as either or both of them publish a report in respect of any media audit of the Plaintiff for third parties or clients of either or both of them in accordance with clause 8 of the Deed of Release between the parties dated 3 May 2001.
2. The Defendants' Cross Claim is dismissed.
3. The Defendants pay the Plaintiff's costs of the proceedings.
2. In or around May 2008, Orleans and Mr Eckett appealed to the New South Wales Court of Appeal from the orders made by Justice Hamilton.
3. On 25 March 2009, the Registry of the New South Wales Supreme Court issued a sealed copy of the orders made by the Court of Appeal on 10 March 2009, as follows:
1. Orleans Investments Pty Ltd and Wayne Gregory Eckett are restrained from:
(a) referring directly or indirectly to the Respondent as a company which receives any bonus, rebate, volume discount or other financial benefit provided to media purchasing companies by media vendors or suppliers in respect of media purchased by them ( Rebate ) in Taiwan or elsewhere in any document or other statement created or made by them;
(b) referring directly or indirectly to the Respondent in any document or other statement created or made by them which discusses or mentions or refers to Rebates in Taiwan or elsewhere; and
(c) directly or indirectly disclosing any information or making or publishing any statement or engaging in any conduct which may harm or injure the name or reputation of the Respondent or the name or reputation of any related body corporate of the Respondent (as defined in Section 46-50 of the Corporations Law as at 3 May 2001),
except in so far as either or both of them publish a report in respect of any media audit of the Respondent for third parties or clients of either or both of them in accordance with clause 8 of the Deed of Release between the parties dated 3 May 2001.
2. The Appeal is dismissed.
3. The Appellants pay the Respondent's costs of the proceedings at first instance and on appeal.
4. On 1 November 2009, Mr Eckett sent an email to Robert Eckert, Kevin Farr, Tom Debrowski and Bob Normile of Mattel.
5. On 2 November 2009, Mr Eckett sent an email to Sandy Flockhart, Stephen Green, Michael Georghegan, Douglas Flint and Richard Beck of HSBC.
6. On 2 November 2009, Mr Eckett sent an email to Don Blair, Mark Parker, James Carter, Willem Haitink, Joaquin Hidalgo, and Nigel Powell of Nike.
7. On 2 November 2009, Mr Eckett sent an email to Marcus Agius, Chris Lucas, John Varley and Robert Diamond of Barclays.
8. A statutory declaration sworn by Mr Eckett was attached to each of the emails referred to at paragraphs 4 to 7 above.
9. The sending by Mr Eckett of each of the emails in paragraphs 4 to 7 above constituted breaches of order 1 of the orders made by the Court of Appeal on 10 March 2009 in that each of the emails and attached statutory declaration:
(a) was a document and/or a statement which was created and/or made by Mr Eckett, which referred directly and/or indirectly to Mindshare as a company which received a bonus, rebate, volume discount or other financial benefit provided to media purchasing companies by media vendors or suppliers in respect of media purchased by them ( Rebate ) in Taiwan;
(b) was a document and/or a statement which was created and/or made by Wayne Gregory Eckett, which referred directly and/or indirectly to Mindshare, and which discussed and/or mentioned and/or referred to Rebates in Taiwan or elsewhere;
(c) directly and/or indirectly disclosed information, and/or made or published any statement, and/or constituted the engagement in conduct, which had the potential to harm or injure the name or reputation of Mindshare or the name or reputation of a related body corporate of Mindshare (as defined in Section 46-50 of the Corporations Law as at 3 May 2001); and
(d) was not a report in respect of any media audit of Mindshare published by for third parties or clients of Mr Eckett in accordance with clause 8 of the Deed of Release between the parties dated 3 May 2001.
10. The sending of each of the emails and attached statutory declaration constituted a contempt of court."
THE EMAILS
17 The email of 1 November 2009 from Mr Eckett was sent to four senior executives of Mattel, a client of Mindshare and of the broader group to which it belongs WPP. That email refers to practices at WPP and attaches a statutory declaration by Mr Eckett alleging a continued pattern of misconduct by WPP and made serious allegations including fraud and taking secret commissions. Mr Eckett alleged breach of a criminal code and illegality in a number of countries. The email also alleged that the information was provided as he was a whistleblower with an acute sense of fair play who believed in truth and justice. The statutory declaration enclosed with it is a lengthy detailed document which attaches a number of other documents. There are a series of serious allegations of secret commissions and of fraud in relation to charging practices and allegations that senior executives in the WPP group were aware of these corrupt practices. Mr Eckett alleges that four named senior executives had been involved in fraud and it concludes that he considered disclosure a matter of public interest and he asserts that his declaration is made in good faith without malice in the belief that justice will prevail. Attached to the statutory declaration are 109 pages of documents said to support the allegations of dishonesty.
18 The three emails of 2 November 2009, together with the statutory declarations were in similar terms and were sent to a number of officers of HSBC, Nike and Barclays which are major clients of Mindshare and the WPP group.
SUBMISSIONS FOR MINDSHARE
19 There have been breaches of restraining orders made by the Court of Appeal in the enforcement of the Deed of Release. There is no relevant distinction between criminal contempt and civil contempt for present purposes. The onus of proof is the criminal onus. Mr Eckett has pleaded guilty to the contempts alleged.
20 Mindshare refers to Pt 55, r 13 of the Supreme Court Rules 1970 (NSW) which empowers the Court to punish contempt by committal, fine or both and notes that the Court has a broad discretion as to the available penalty measures. In this case Mindshare does not press for an order that there be committal to a correctional centre or detention of Mr Eckett. Mindshare contends that the conduct in the present matter should be properly described as "contumacious and flagrant". There is no doubt that Mr Eckett knew and fully understood that he was breaching the terms of the orders at the times of the breaches.
21 There were a number of breaches of the orders and each of the breaches was in clear defiance of the central purpose of the order which was specifically to restrain disparagement in the nature of the statements made in the emails. The statements were calculated to damage the reputation of Mindshare and the group with which it was associated and officers of these bodies. In addition, as counsel for Mindshare points out, Mr Eckett, in a statement of 6 October 2010, in proceedings in the Taipei District Court, stated that he had received seven emails in reply to the November 2007 emails sent by him and telephone calls from recipients which indicated that they were investigating the activities of WPP media agencies as a result of the content and implications of his disclosures and he says that many recipients stated the alleged conduct was regarded seriously.
22 Also in his statement of 6 October 2010, Mr Eckett concedes that one of his reasons behind sending the November 2009 emails and documents, apart from acting as a "whistleblower", was to prevent the liquidation of Orleans in Australia pursuant to proceedings brought by Mindshare. He concedes that this objective was not achieved and that Orleans was deregistered on 15 August 2010.
23 This statement of objectives indicates in the clearest manner that Mr Eckett intended to abuse the legal process by bring pressure on Mindshare to discourage its pursuit of its legal rights by a systematic course of making representations in manifest breach of the orders of the Court of Appeal and thereby discourage access to adjudication. Such a course can be properly described as flagrant and contumacious conduct in relation to orders of this Court and is deserving of a significant and effective punishment. I accept the submission of counsel for the Mindshare that the statement in the Taiwanese proceeding demonstrated a lack of contrition at that time and a lack of respect for the authority of the Court and its orders and processes and that there was a real likelihood of the contempt recurring having regard to the consistent history of non-compliance and indeed defiance by Mr Eckett in this matter.
ISSUES
24 The only live issue is the appropriate measure of punishment for the admitted contempt in the circumstances of this case.
PRINCIPLES AND REASONING
25 The reasons for judgment of Campbell J in NCR Australia v Credit Connection [2005] NSWSC 1118 provides a detailed resume of the applicable legal principles: see also Registrar of the Court of Appeal v Maniam [No 2] (1992) 26 NSWLR 309 at 313-316; Principal Registrar of the Supreme Court of New South Wales v Jando (2001) 53 NSWLR 527 at [12]-[56].
26 The Court has a wide discretion as to the nature and extent of appropriate measures to punish for contempt and it can mould the orders to meet the particular case and where a bond is imposed such bond should relate to the character of the breach including deterrence and rehabilitation: see R v Bugmy [2004] NSWCCA 258 at [61].
27 A court may punish for contempt by way of fine but this would be inappropriate if it is likely that the defendant is unable to pay. In this case an opportunity has been given to the defendant to put before the Court his financial position in detail but he has presented no satisfactory admissible evidence that establishes he is unable to pay any particular amount by way of fine.
28 Because the defendant is outside the jurisdiction and there is no assessment report the option of community service is not available in this case.
29 The admitted contempt is serious because it amounts to a clear and direct defiance of court orders which were made after hard fought litigation before Hamilton J and in the Court of Appeal. The defendant must have been well aware of the orders and their purpose which was to enforce the rule of law and the judgment of the Court. The defendant was, on his own admission, using the emails as a pressure point to deter the pursuit of legal proceedings. In determining the appropriate nature and extent of punishment, the Court will consider the factors set out in ss 21A and 22 of the Crimes (Sentencing Procedure) Act 1999 (NSW). The relevant considerations for present purposes are set out in this judgment and other provisions which are not relevant I have not dealt with.
30 Although he claims to be a "whistleblower", presumably by way of partial justification, the conduct was undertaken with the underlying and calculated purpose of forcing an abandonment by the plaintiff of the exercise of legal rights. In effect, this is an attempt to distort the legal process and calls for serious measures by way of punishment and deterrence.
31 I am satisfied that Mr Eckett was well aware of the consequences to himself of his contempts after the substantial litigation in which he was engaged and the legal representation which he retained. The orders are clear and unambiguous in their language. I am also satisfied that he was aware of the effect of his actions in trying the in frustrating the enforcement of the orders against him in the injunction proceedings.
32 Although he professed to be acting in the public interest I am satisfied that his dominant reason was to protect his company from deregistration. He has clearly sought to obtain a benefit from his conduct.
33 There were four emails sent in similar terms over a period of two days. In these circumstances it is appropriate to treat them as a single transaction and not as four separate transactions or distinct acts of contempt.
34 Albeit at a late stage, the defendant has in writing expressed his contrition for his conduct and I have taken this into account although he has decided not to appear before the Court to manifest the sincerity of his contrition. I have taken into account that he ahs pleaded guilty to the contempt and has co-operated in the formulation of an Agreed Statement of Facts.
35 As regards his antecedents, whilst some details of convictions have been placed before the Court, the matters referred to are remote in time and nature from the course of conduct here under consideration. I give them no weight. He is entitled to be treated as a person of good reputation and character apart from his present conduct.
36 As noted, there is no satisfactory evidence of his means or lack of means to meet any fine or monetary imposition. This is a case where deterrence is important. There has been a clear open defiance of court authority and orders for personal benefit. The conduct is properly classified as contumacious.
37 The evidence establishes that at least some of the recipients have been "concerned" at the emails which is not surprising having regard to the nature, extent and detail of the destructive allegations made in the documents. I accept that the sending of this material to major clients must have had some adverse effect on the plaintiff and the WPP group although the extent of this detriment is not specifically measurable on the evidence presently before me.
38 There is a need in this case to vindicate the authority of the Court and the need to abide by the rule of law in order to deter further conduct of this defiant nature: see Australian Competition and Consumer Authority v Hughes (2002) ATPR 42,779 at [28].
PUNISHMENT
39 The plaintiff does not seek a custodial sentence and community service is not appropriate.
40 Two remedies which are available are the imposition of a fine and/or a bond. In my view both these measures should be adopted.
41 In accordance with s 6 of the Fines Act 1996 (NSW) I must have regard to the information presently available regarding the means of the defendant. As mentioned earlier, he has not provided any details to show that he is unable to pay a substantial fine.
42 In the circumstances of this case, I consider that a fine of $50,000 is appropriate to be paid as to $25,000 within 42 days and the remainder to be suspended and satisfied by entry into a good behaviour bond provided he complies with the requirements of the bond.
43 To deter further defiance of court orders, I consider that the defendant should be required to enter into a good behaviour bond in accordance with s 9 of the Crimes (Sentencing Procedure) Act in the terms set out in Annexure A to these reasons.
44 The bond should be for a period of three years which together with the amount of the fine should be sufficient to bring home to the defendant the need to obey court orders and to emphasise the important of adherence to the rule of law. Because these contempts expressly defy the authority of the Court and having regard to the wide discretion which I have I consider it appropriate to impose a requirement that the defendant should personally write out in his own hand and provide to the Court an essay in the form indicated in Annexure A.
45 In relation to costs, the defendant should pay the plaintiff's costs on the usual basis in contempt proceedings which means that costs should be paid by him on an indemnity basis. Accordingly, I grant the motion for contempt and make the following orders: