Natural Floor Covering Centre Pty Ltd v Monamy

NEW SOUTH WALESDISTRICT REGISTRY NSD 1658 OF 2005

REASONS FOR JUDGMENT (REVISED FROM THE TRANSCRIPT) 1 In these proceedings I found the applicant has satisfied me beyond reasonable doubt that the respondent was guilty on four charges of contempt in my judgment in Natural Floor Covering Centre Pty Ltd v Monamy (No 1) [2006] FCA 518. Today I have heard evidence from the respondent both on affidavit and in the witness box relating to the circumstances in which the contempts occurred and his current attitude in relation to the subject matter of those charges. 2 The applicant accepts that the respondent is now complying with the orders made by Wilcox J on 15 December 2005 and as I understand he has complied since at least I gave judgment on 9 May 2006. Although the applicant has filed an affidavit of Ms Than on 16 May 2006 which refers to a Mr Dennis Henry Monamy, owning some property, the respondent is Dennis Alfred Monamy and no suggestion was made when the respondent was being cross-examined that he was the owner of any property. 3 In his evidence the respondent has deposed to commencing work in around 1990 as a contractor with the applicant installing floor coverings on a regular basis. That relationship ended in around 1995 when he was unable to agree on further terms with the applicant. He said he began trading under the business name Simply Natural Floorcoverings in around 1995 and created a web site for that purpose. During the middle of 2005 the applicant and the respondent began a series of communications that ultimately led to the litigation and mediation in this court resulting in the orders made by Wilcox J on 15 December 2005. 4 The respondent had legal representation in December 2005 when attending a mediation with mediators being registrars of the Court on 12 December 2005. His solicitor then was a Mr Leamey. Mr Leamey and the respondent according to the respondent's evidence, did not see eye to eye on how the mediation was to proceed and the respondent asserts that he was not fully comprehending of what the terms that were ultimately signed by him entailed or meant. He says that he signed the heads of agreement on 12 December 2005, in effect because, he would want me to accept, his solicitor told him to do so. In his affidavit he says that Mr Leamey during the course of the mediation left the room for a short time, returned and said to him words to the effect: 'They are not willing to budge. As I told you before if you do not sign this you may lose everything.' The respondent then said that he signed the document but did not believe that by doing so it would be the end of the matter. The respondent asserted that the heads of agreement were, as he understood, the start of a process and that he intended to get advice from someone other than Mr Leamey. 5 He then went to Murwillumbah in the early morning of 13 December 2005 and received emails from Mr Leamey concerning the formulation of the orders that were ultimately made. He emailed Mr Leamey on 14 December 2005 saying that he intended to seek alternative legal advice but that Mr Leamey responded to him telling him that it was too late and that he could not 'welch on the deal'. He asked Mr Leamey to stand the matter over but Mr Leamey the next day signed the consent orders which Wilcox J ultimately made. 6 I am not in a position to adjudicate upon whether or not, when Mr Leamey signed the consent orders and agreed to the court making them, he was instructed to do so and I make no findings about that matter other than that at this stage I can only proceed on the basis that the orders are valid and binding on the respondent until they are set aside and that he was obliged to obey them from the time they were made. 7 The respondent explained that he visited the registry shortly afterwards and sought advice as to how to obtain orders setting aside the orders made by Wilcox J. He then said he engaged new solicitors, Frankel Lawyers, to act on his behalf. He said that when he did so: 'They advised me that until the orders were set aside I should observe them. They advised me I should expeditiously attend to separating the words "floorcoverings" wherever it appears on my web site.' 8 He then said that he spent a long time going through his web site pages trying to find where the words appeared and making such a separation. The respondent has deposed in his affidavit of 26 May 2006, par [36], that: 'I accept that I breached orders 3 and 4 by not sufficiently separating "floorcoverings" and capitalising the word Coverings" within the expression "Simply Natural Floorcoverings" on the web site. 9 He said that on 2 March 2006 he changed the business name to separate the word 'floorcoverings' into two separate words and that he borrowed the $130 fee to bring that about from a friend, Jerry Schwartz. He said that on 13 March 2006 he was served with a motion for contempt and was very upset on receiving it because he could not understand that action in light of the fact that he had been moving as expeditiously as he could through his web site and had spent many weeks going through the process in an effort to comply with the orders. 10 Most significantly the respondent said in his affidavit of 26 May 2006 that until 9 May 2006 he did not appreciate the grave seriousness of the matter because until that time: 'I just could not believe that orders made without my final consent could be held against me. I saw the contempt application made by the applicant as just a further step by it against me in the proceedings which I thought were unjustifiable. Being a non-lawyer, I have also found it extremely difficult to understand why I could not put all my evidence and arguments about the alleged trademark and other infringements before the Court dealing with the contempt charges in circumstances where it is those very allegations that are the source of the contempt charges. I thought that if I challenge the source of the problem, being those infringement allegations, then the rest of the problem would also go away. In the process of doing that, I now appreciate that what I in fact did was commit contempt of court, and moreover, made myself appear to disregard not only the courts orders but also the finding of contempt against me. The Senior Counsel who has been found for me through the New South Wales Bar Association has made the gravity of my conduct clear to me in forceful terms. I sincerely apologise to the Court for my conduct which I now understand was contempt. As soon as the contempt matter is finalised, I intend to make an application to set aside the original orders, but I know now that the contempt proceedings must be dealt with first because whether I believed I was right or wrong in relation to the infringement allegations, and the circumstances in which the orders were made, I disobeyed the Court's orders. This is something I am deeply sorry about, not just because of the consequences to myself, but because I never intended, by any of my actions, to disobey the authority of the Court. I do not have any resources, and I cannot pay the Applicant any money or afford legal representation.' 11 I saw and heard the respondent in the witness box today. I accept the apology that the respondent has proffered to the court, albeit belatedly but with the assistance of counsel who have appeared for him today pro bono. 12 I am satisfied that I should proceed to convict the respondent on the four charges, being charges 6, 8, 9 and 11 which I found proved beyond reasonable doubt in my judgment of 12 April 2006. No argument was addressed to me that I should not convict him. In my opinion the charges involve conduct that was protracted and intentional and such as the court ought mark by convicting by reason of their objective seriousness.

SUBMISSIONS ON PENALTY 13 I am not satisfied that I have had fully explained in evidence the respondent's financial position. His affidavit contains a mere assertion that he lacked resources and cannot pay the applicant any money or afford legal representation. It is common ground that currently there is returnable before the Federal Magistrates Court an application by the applicant to make the respondent bankrupt for failure to comply with the order made by Wilcox J on 15 December 2005 that he pay the applicant $10,000. That matter is returnable before the Federal Magistrates Court on 13 June 2006 at which time the applicant intends to proceed to seek orders for the sequestration of the respondent's estate for failure to comply with the court order. 14 It is suggested by the applicant that that circumstance should weigh with me in determining the penalty to be imposed and in particular whether the imposition of a fine might mark the court's disapprobation of the conduct of the respondent in a way that has no real impact upon him because the sequestration of the respondent's estate, were it to occur, would substantively suggest that, there being no money with which to pay, the fine will have no effect. 15 The respondent accepts that there ought be an order for costs to be paid by him on an indemnity basis in respect of the proceedings up to the conclusion of the hearing on 12 April 2006. The respondent does not seek costs for 9 or 12 May 2006 notwithstanding his ultimate success today on charge number 2 with which both those days were substantively concerned. 16 The applicant seeks some costs for those days on the basis that the respondent protracted the proceedings, as I think it may fairly be said he did, and by causing disruption through having said he required no one for cross-examination and then requiring both Ms Than and Mr Dowe to attend, which they did, on 12 May 2006.

COSTS 17 Doing the best I can it seems to me that in relation to the costs of the matter it would not be fair or appropriate to the parties to engage in a complex division up of the hearing time and efforts to bring the matter to hearing on 12 April 2006 if I were to try to segregate out the costs in relation to charge 2. While I recognise that the respondent did perhaps unnecessarily protract the hearing of charge number 2 at the end of the day he has ultimately succeeded on that, albeit on a legal ground perhaps not articulated by him which was certainly taken by senior counsel when he appeared today on the respondent's behalf. 18 I think that the appropriate order I should make in relation to the costs is that the respondent pay on an indemnity basis the costs of the proceedings up until and including 12 April 2006 and the costs of today on a party/party basis, and the other costs of the proceedings on a party/party basis, except that there should be no order as to costs for the hearings on 9 and 12 May 2006 and the preparation for those hearings.

PENALTY 19 The question then arises as to what fine I ought impose on each of the counts that I have found proved and for which I have convicted the respondent. Charge 6 involved the use of the business name Simply Natural Floorcoverings with 'floorcoverings' as one word on the web site for a period that commenced at least on 19 January 2006 and continued at least to 2 March 2006, as I found in Natural Floor Covering Centre Pty Ltd v Monamy (No 1) [2006] FCA 518 at [37] and [38]. 20 I am of opinion that that was conduct which was quite clearly against both the spirit of the heads of agreement and the terms of the consent orders. While I cannot take account of the heads of agreement in imposing penalty, I am entitled to have regard to the fact that the respondent had urged that the orders were ones that he did not believe he needed to obey within any particular time. The fact is that by 2 March 2006 he had applied to and succeeded in changing his business name to separate the word 'floorcoverings' into two separate words. It was plain, in my opinion, that that should have been done a long time before, at least no later than when he was served with a properly endorsed set of orders on 19 January 2006. I do not think that this contempt has been satisfactorily explained. 21 It is appropriate that the court, in addition to requiring a payment of costs, should impose a penalty by way of a fine. In all the circumstances, I will impose a fine of $1500 for that breach. 22 The next charge is charge 8, which has a cognate character with charge 6 in that Wilcox J's order number 4 required the respondent to change his registered business name to separate the word 'floor' from the word 'coverings' as two words. Again, for the period between 19 January 2006 to 1 March 2006, the respondent did not do so, and I am not satisfied that there is any good reason why he did not. In light of the fine that I have imposed for the contempt in respect of charge 6, I am of the opinion that an appropriate fine, having regard to the principle of totality, for the breach of charge 8 should be $500. 23 In relation to charge 9, that from no later than 19 January 2006 to 2 March 2006 the respondent used the business name Simply Natural Floorcoverings with 'floorcoverings' as one word on his website, again I see this as having a cognate character with charges 6 and 8. And again, it seems to me appropriate that in light of what I have said before, I should impose a fine of $500 on that charge. 24 Charge 11 involved the use of the HTML meta tag which I described in Natural Floor Covering Centre Pty Ltd v Monamy (No 1) [2006] FCA 518 at [41]-[47]. That conduct was engaged in between at least 1 March 2006, as I found ([2006] FCA 518 at [47]), and at least no later than 24 April 2006, which is the date Ms Than refers to in par 5 of her affidavit of 15 May 2006 as the date on which the disclaimer was noted by her to appear. 25 The period to which I have regard in imposing the fine in respect of charge 11 should, I think, reflect most prominently the use of the meta tag in the period between 1 March 2006 and the date of my finding of guilt on 12 April 2006, which is a period of almost six weeks. 26 In my opinion, this breach was quite flagrant, as I described in Natural Floor Covering Centre Pty Ltd v Monamy (No1) [2006] FCA 518. It was a deliberate attempt to evade the very clear order requiring an active communication by the respondent of the dissociation of his business from the applicant's. The use of the meta tag was calculated to avoid giving effect at all to the order. It was an attempt to disguise the very thing the order required be revealed: namely, the dissociation of the businesses. 27 I do not accept any explanation that the respondent has sought to give of that behaviour. In the witness-box today he asserted that he had put the meta tag there knowing, as he said, that it would not be visible to the ordinary viewer of the webpage but that it might be seen in some web browsers. The reason he gave for putting the disclaimer in a meta tag, was that he thought that that was above the fold referred to in the order. For the reasons that I gave in Natural Floor Covering Centre Pty Ltd v Monamy (No 1) [2006] FCA 518, the use of the words 'above the fold' makes no difference to the proper construction of the orders or the flagrancy of the evasion which the use of the meta tag involved. 28 In my opinion, that behaviour was quite contumacious and deliberate, as well as being 'clever' in both senses of that word. I think I should mark the court's disapprobation of that conduct by imposing a fine of $2500. 29 In reaching the view which I have expressed, at this stage tentatively, as to the appropriate fines to be imposed I have had regard to the nature and circumstances of each offence as I have outlined already. I have also had regard to the matters referred to, although I may not necessarily be required to do so, in s 16A of the Crimes Act 1914 (Cth) in relation to sentence. In particular, each of the offences is related to the others and forms part of an ongoing course of conduct which ultimately came to an end with the recognition that the respondent has now given that his conduct was wrong and in breach of the orders. 30 The applicant has called no evidence of any damage it has suffered in relation to the breaches of the order. It is entitled, of course, to uphold the law by taking these proceedings but I am mindful that it is not suggested that there has been any substantive injury to the applicant in its business by reason of the breach. 31 The respondent has shown contrition for the offence, although at a late stage and in circumstances in which, as I have set out, in his affidavit he recognises that what he did was wrong, having now had the benefit of legal advice. I am mindful that the respondent has hitherto not really co-operated with the applicant in dealing with the offences, although he has now complied with the orders. I think that the deterrent effect of the fines which I have suggested should be imposed will bring home, not only to the respondent, but to others that the court's orders ought be obeyed. I am mindful that the respondent has said that he is of limited means and there is some evidence to support that, although, as I have earlier indicated, he has not gone into great detail about those matters. 32 Nonetheless, it seems to me that this is not a matter in which the only other relevantly available remedy which the court might have, namely that of imprisonment, would be appropriate in all of the circumstances. There is no suggestion that the respondent has any previous criminal history or history of contempt of court orders. He is a man of obvious intelligence and ability, being in appearance of middle-age, but apparently reasonably healthy physically and mentally. I am satisfied that he will take seriously the penalty that is to be imposed and that it will be of use in his rehabilitation. There is no evidence or other material before me that there is any family or dependent of the respondent who would be affected by the sentence imposed. I therefore do not need to have regard to that issue. Subject to hearing further from the parties as to the proposed penalties that I would impose and the time in which they might be paid, I think I should proceed to make formal orders.

THE COURT DECLARES THAT: 1. The respondent is not guilty of contempt of court as alleged in respect of order 2 made by Wilcox on 15 December 2005.

The respondent is guilty of contempt court in that in breach of order 3 made by Wilcox J on 15 December 2005 in that since 19 January 2006 up to 2 March 2006 he used the business name 'Simply Natural Floorcoverings' (with 'floorcoverings' as one word) on his website.

The respondent is guilty of contempt of court in that in breach of order 4 made by Wilcox J on 15 December 2005 he had from no later than 19 January 2006 up to 1 March 2006 failed to change his registered business name to 'Simply Natural Floor Coverings' (with 'floor coverings' as two words).

The respondent is guilty of contempt of court in that in breach of order 4 made by Wilcox J on 15 December 2005 he had from 19 January 2006 up to 2 March 2006 used the business name 'Simply Natural Floorcoverings' (with 'floorcoverings' as one word) on his website.

The respondent is guilty of contempt of court in that in breach of order 5 made by Wilcox J on 15 December 2005 he had from no later than 1 March 2006 up to 12 April 2006 failed to publish in the words drafted in the applicant's solicitor's letter to the respondent dated 22 February 2006, a disclaimer on his website that his business was not associated with that of the applicant in font size 12 on the first page of the webpage in a prominent position above the fold or at all.

In respect of contempt referred to in paragraph 2 above, the respondent be fined in the sum of $1500.

In respect of the contempt referred to in paragraph 3 above, the respondent be fined in the sum of $500.

In respect of the contempt referred to in paragraph 4 above, the respondent be fined in the sum of $500.

In respect of the contempt referred to in paragraph 5 above, the respondent be fined in the sum of $2500.

The respondent pay the fines imposed in orders 6, 7, 8 and 9 on or before 29 May 2007 in default of which the District Registrar bring to the attention of a judge of the court the default of the respondent to comply with orders 6, 7, 8 and 9.

The respondent pay the applicant's costs of the proceedings up to and including 12 April 2006 on an indemnity basis and, subject to order 11, the costs of and incidental to today's hearing on a party/party basis.

There be no order as to the costs of and incidental to the hearings on 9 and 12 May 2006.

I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares.

Counsel for the Respondent: Mr R Webb SC with Mr H Altan (pro bono)