PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission

The Commission 20 As presented in oral submissions, the Commission's case is that the Court has a general power to control its own proceedings, which extends to making an order that a proceeding be stayed: Hughes Motor Service Pty Ltd v Wang Computer Pty Ltd (1978) 35 FLR 346 at 351; Muller v Fencott (1981) 53 FLR 184; at 189; Bond Corporation Pty Ltd v Thiess Contractors Pty Ltd (1987) 14 FCR 193 at 203. 21 The order it seeks - that the appeal proceeding be stayed until further order - is an interlocutory order. Section 25(2B)(ab) provides that a single Judge or a Full Court may make an interlocutory order pending or after the determination of an appeal to the Court. The Commission says that, as used in the rule, the word "pending" has temporal significance. It argues that, so understood, there is no doubt that Garuda's appeal is pending and the power to make an order under s 25(2B)(ab) is enlivened. 22 The Commission submits that the power to order a stay involves the exercise of a very broad discretion: the question is whether, in the given case, it is in the interests of justice that a stay be granted. The Commission says that this power is an incident of the Court's general power to control its own proceedings for which s 23 of the Act provides statutory support: Australian Securities and Investments Commission v Australia and New Zealand Banking Group Ltd [2019] FCA 964; 138 ACSR 42 at [50]. The Commission submits that it is not necessary for it to demonstrate the existence of "special circumstances". It accepts, however, that it is necessary for it to demonstrate an appropriate case: Powerflex Services Pty Ltd v Data Access Corp (1996) 67 FCR 65 at 66; Alexander v Cambridge Credit Corporation Limited (Receivers Appointed) (1985) 2 NSWLR 685 at 694. 23 The Commission submits that it is in the interests of justice in the present case that the stay it seeks be granted because, as I have noted at [4] above, Garuda has not complied with the pecuniary penalty order and has provided no plausible justification for that failure. 24 In its written submissions, the Commission made clear that its case for a stay was based on the fact that Garuda was in contempt of the Court's order. It submitted: 13. While a party in contempt of Court will not ordinarily be heard in the proceedings in relation to which the contempt exists, the fact that a party has disobeyed an order of the Court is not of itself a bar to the party being heard on a subsequent application brought by the party. 14. However, the application for a stay of proceedings is not predicated upon the fact of disobedience alone. Garuda's disregard for the authority of the Court is compounded by, and to be inferred from, the absence of: (i) any attempt to purge the contempt; (ii) justification of the contempt; and (iii) any indication that Garuda would comply with any pecuniary penalty order made on appeal. 25 After referring to Foster v Australian Competition and Consumer Commission [2014] FCA 240; 219 FCR 563 (Foster), the Commission continued: 26. It is not appropriate for Garuda to invoke the Court's processes as and when it suits Garuda, while being free, in its own mind, to defy its authority and process likewise as and when it chooses. Nor is it appropriate to permit Garuda, as a contemnor, to engage further in this litigation and to subject the ACCC to further costs in circumstances where it is apparent that Garuda utilises its claimed structure of affairs to suit itself; that is, for the purposes of defending itself against a claim, but not so as to meet any liability or obligation imposed by the Court. In that regard, Garuda demonstrates no respect for the orders of the Court or its authority, and it would appear by its failure to pay the pecuniary penalty order, in whole or in part, that it may well continue to defy the Court's authority if the pecuniary penalty order is affirmed on appeal or varied. … 28 In any event, in circumstances where Garuda is continuing to defy the Court's authority by not paying the pecuniary penalty or renewing its application for a stay of the pecuniary penalty order, its contempt impedes the course of justice. Where there is no other effective means of securing compliance, the ACCC submits that it is appropriate for the Court to order a stay of the appeal, until Garuda has purged its contempt or otherwise succeeded in obtaining a stay of the pecuniary penalty order, and then only by further order of the Court in the exercise of its supervisory role over the matter. 26 In oral submissions, the Commission put its case differently. As Senior Counsel for the Commission put its position: A lot of authorities have been cited by my friend, and we've sought to deal with some of those in our submissions. But this is all in the territory of whether or not the proceeding is in the context of a contempt. We're not proceeding on the basis that Garuda is in contempt. It may well be. We don't know, ultimately, whether or not, if a charge of contempt was filed, that Garuda may or may not at that stage lead evidence, which may or may not explain that any conduct was not wilful or deliberate. But simply at the moment, the court cannot, on the material before it, form any view as to whether that was wilful or deliberate. It's no part of our application that we say we have to establish that Garuda was in contempt. What we're relying on is the general discretion of the court to control its own processes in justice, including granting a stay in appropriate circumstances. 27 I understand from this submission that the Commission was not abandoning the case that it had put in its written submissions. Rather, it was intending to say that its case was for a stay of the appeal and not a case brought formally to punish Garuda for contempt pursuant to s 31 of the Act, which provides: (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. (2) The jurisdiction of the Court to punish a contempt of the Court committed in the face or hearing of the Court may be exercised by the Court as constituted at the time of the contempt. 28 This understanding is consistent with the Commission's written submissions in chief in which it submitted that the Court's discretion to grant a stay is not conditional upon formal steps having been taken or foreshadowed for prosecution of contempt (citing Foster at [19]). This submission was repeated in the Commission's written submissions in reply.

Garuda 29 Garuda submits that the Court's jurisdiction has been regularly invoked and that it has a prima facie right to have that jurisdiction exercised. It submits that the Court has a duty to exercise that jurisdiction absent an established ground for staying the proceeding. It submits that, while the Court has a general power to control its own proceedings, and that that power extends to granting a stay of the proceedings, there needs to be a proper basis for ordering the stay. The power is not, as it were, at large. 30 Garuda also submits that the Commission must anchor its application in some appropriate source of power. 31 In this connection, Garuda submits that s 23 of the Act (which provides, amongst other things, that the Court has power to make orders of such kinds, including interlocutory orders, as it thinks appropriate) is not a source of power on which the Commission can rely because it is concerned only with the power of the Court in the exercise of its original jurisdiction, whether that jurisdiction is exercised by a single Judge or a Full Court: Trade Practices Commission v Manfal Pty Limited (1990) 27 FCR 284 at 287. 32 Garuda submits that s 25 itself is not a source of power because it is concerned only with regulating the Court's power in the exercise of its appellate jurisdiction, in particular whether the Court's power is to be exercised by a Full Court only, a single Judge only, or either a Full Court or a single Judge. 33 Garuda submits that the powers which the Court has in exercising its appellate jurisdiction are found in s 28 of the Act. However, these are of no assistance to the Commission's application. Section 28(1)(b) (which provides that the Court may exercise its appellate jurisdiction by giving such judgment or making, or refusing to make, such order as in all the circumstances it thinks fit) is concerned only with the exercise of appellate jurisdiction, not a refusal to exercise that jurisdiction. 34 In oral submissions, Garuda submitted that the only power that the Commission can rely on is that found in s 31 of the Act - the power to punish contempt. Garuda submitted that s 31 provides all the powers of self-protection that a superior court has when its orders have not been complied with. According to Garuda, this is the source of power on which the Commission must rely and provides the gateway through which it must proceed in this application. However, given the Commission's position as now expressed in oral submissions (see [26] above), Garuda submits that the Commission's application for a stay must fail at the outset. 35 In oral submissions, Garuda also submitted that, even if it is not necessary for the Commission to pass through s 31 of the Act (Stokes (by a tutor) v McCourt [2013] NSWSC 1014 (Stokes) at [44]), its application must necessarily be based on a finding of contempt in order to deny Garuda's right to be heard on appeal. Thus, there must be a finding of contempt and such a finding must be based on evidence before the Court. 36 Relatedly, Garuda argues that r 42.12 of the Federal Court Rules 2011 (Cth) applies even though the allegation of contempt is not made in formal proceedings to punish the contempt under s 31 of the Act: An application alleging that a contempt has been committed must be accompanied by: (a) a statement of charge, in accordance with Form 137, specifying the contempt with sufficient particularity to allow the person charged to answer the charge; and (b) the affidavits on which the person making the charge intends to rely to prove the charge. 37 Garuda submits that the chapeau to this rule is in general terms, which makes it applicable to the present interlocutory application as it would be if formal proceedings to punish contempt had been commenced by the Commission. In short, any application where contempt is alleged must be supported by a statement of charge. Garuda submits that the Commission has not complied with that requirement. It submits that it is entitled to be told by the Commission whether it (the Commission) is relying on Garuda's capacity or ability to pay the pecuniary penalties as a reason for imposing the stay it seeks. Garuda says, therefore, that another reason why the Court should not find contempt is that Garuda has not been given clear notice that its ability to meet the pecuniary penalty order has been put in play in this application. Not having been put on notice, Garuda says that it has elected not to go into evidence on that question. 38 Garuda submits that, in any event, the evidence which the Commission has adduced to support its application is insufficient to enable a finding of contempt to be made. It is an essential element of a contempt constituted by failure to pay a penalty that the acts or omissions constituting that failure are deliberate and voluntary. Consequently, it is essential to a finding of contempt that Garuda had both the legal and practical capacity to make a payment which it failed to make. Garuda submits that the Commission carries the burden of proof on that question and that the standard of proof is beyond reasonable doubt. It submits that the Commission has failed to allege or to prove Garuda's legal or practical capacity to make the payment it has not made. Therefore, there can be no finding of contempt: Australian Competition and Consumer Commission v World Netsafe Pty Limited [2003] FCA 159; 127 FCR 542 (Netsafe) at [51] - [52]; Siminton v Australian Prudential Regulation Authority (No 3) [2008] FCAFC 89; 168 FCR 140 at [25] - [26]; [30] - [32]; [41]. 39 In this connection, Garuda points to the fact that it is a foreign registered company under s 601CD of the Corporations Act 2001 (Cth) (the Corporations Act). Sections 124 (powers and capacities of the company) and 129 (presumptions when dealing with the company) of the Corporations Act do not apply to it. It is an agency or instrumentality of the Republic of Indonesia and, hence, a "separate entity" within the meaning of s 3(1) of the Foreign States Immunities Act 1985 (Cth): PT Garuda Indonesia Ltd v Australian Competition and Consumer Commission [2011] FCAFC 52; 192 FCR 393. In that case, Rares J (with whom Lander and Greenwood JJ agreed at [49]) said (at [169] - [171]): 169 Here, however, it is difficult to see what other purpose Indonesia could have had in incorporating, directly owning 95.5% of, and investing in Garuda, unless it wanted such an airline to conduct the very enterprise it did, and continues to, conduct. Indonesia was the shareholder of almost all of Garuda's issued capital. Two perseros owned the balance, but there was no evidence as to whether those two perseros were wholly or majority State owned. Even if 49% of each of the two minority perseros was owned by third parties, about 98% of Garuda would be owned by Indonesia. All the shareholders in both Garuda and its two minority perseros were governed by Law No 19, including their purpose and objective as a BUMN under Art 2(1)(c) of "benefit[ing] the public by providing high-quality and satisfactory … services fulfilling the needs of the people". 170 Indonesia had ultimate control over the boards of directors and commissioners because of its beneficial ownership of all, or almost all, the shares in Garuda. It is a State owned airline, established on a corporate model, under Law No 19 for State owned companies: cf SGH 210 CLR at 70-71 [23]-[26], 73 [32]; NRMA 55 FCR at 472E-478G. Even though Indonesia did not claim immunity through its Ambassador or a Minister, the compelling inference on the whole of the evidence is that Garuda is an agency or instrumentality of that State. Garuda is the means by which Indonesia carried on the business of an airline. That is the end or purpose for which Indonesia used Garuda: cf State Bank 174 CLR at 231-232. 171 It follows that Garuda was and, at all the times in which its conduct is complained of by the Commission, has been a separate entity of Indonesia. 40 In oral submissions, Garuda's counsel described it as a limited purpose, public entity controlled by the Indonesian Government and submitted that there is a real question whether, under Indonesian law, the Indonesian Government could properly authorise payment of moneys which would compromise Garuda's purpose or ability of benefiting the Indonesian public by providing "high-quality and satisfactory services justifying the needs of the people". Garuda submits that this question - which goes to its legal capacity to comply with the pecuniary penalty order - has not been explored in this application by the Commission. Further, there is no evidence before the Court to suggest that, up to 23 August 2019 (the date to which compliance with the pecuniary penalty order was extended), Garuda had the practical capacity to comply with the pecuniary penalty order. Garuda submits that the fact that the Commission has not taken steps to enforce the pecuniary penalty order reveals the Commission's understanding of Garuda's capacity to comply. 41 As to the question of discretion (assuming that contempt has been established) Garuda submits that the discretion to grant a stay of the appeal should be exercised in its favour with primary reference to the fact that the appeal is against the order in respect of which Garuda is said to be in contempt; there has been no open defiance of the authority of the Court by Garuda and no indication by Garuda that its non-payment is due to anything other than incapacity (practical and legal); and the Commission has the benefit of a money order and has taken no step, other than the current application, to enforce that order. 42 Garuda submits that it is not sufficient to ground a stay of the appeal that some "tidying up" of the kind suggested by the Commission is required, namely payment of the pecuniary penalties or Garuda making a successful stay application of the pecuniary penalty order. Garuda submits that the administration of justice is served by ensuring that it, as a party who has been ordered to make a substantial payment, does not wilfully fail to make that payment. However, that important fact has not been established. Beyond that, there is no interest of justice to be served. Garuda submits that punishing it for mere non-payment of the pecuniary penalties would not be a proper exercise of the Court's power to stay proceedings and that any punishment in that regard should be sought in the context of contempt proceedings properly instituted under s 31 of the Act. 43 As to the exercise of the power under s 25(2B)(ab) of the Act, Garuda submits that the word "pending" does not have the temporal significance which the Commission attributes to it. Rather, it means "remaining undecided, awaiting decision". When s 25(2B)(ab) speaks of an interlocutory order pending the determination of the appeal, it refers to an order that can be made while awaiting the decision in the appeal. The order that the Commission asks the Court to make is not such an order: it is not an order awaiting the determination of the appeal, it is an order stopping the appeal. The denouement of this argument is that the Court, as presently constituted by a single Judge exercising the appellate jurisdiction of the Court, cannot make the order that the Commission seeks; this can only be done by a Full Court under s 25(1) of the Act.

Analysis 44 The Commission's application is put on a simple basis. In a nutshell, Garuda is in contempt of the pecuniary penalty order and its appeal should, therefore, be stayed until it has "regularised" its position by paying the pecuniary penalties or obtaining a stay of that order. 45 So put, the argument is superficially attractive, if not alluring. However, after some reflection, I have come to the conclusion that it should not be accepted. 46 I have no doubt that the Court has the power to control the exercise of its appellate jurisdiction, including by granting a stay of proceedings. There must, however, be a substantial basis for exercising that power. Such basis may be provided by an appellant's contempt in failing to comply with an order of the Court. Where contempt is relied on, it is not necessary that the contempt be established through proceedings commenced under s 31 of the Act to punish the contempt: Young v Jackman (1986) 7 NSWLR 97 at 101; KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189 at 206; Hwang v Lawrie [2013] QCA 204; [2014] 1 Qd R 562 (Hwang) at [18]; Stokes at [44]; Foster at [19]. Nonetheless, the contempt must be established. 47 In the present case, there is no dispute that Garuda has not complied with the pecuniary penalty order which, as extended, required it to pay the pecuniary penalties by 5.00 pm on 23 August 2019. However, failure to comply with an order to pay money is not, itself, sufficient to make out a finding of contempt. What is required is wilful disobedience of the order (i.e., disobedience that is not casual, accidental or unintentional): Australasian Meat Industry Employees' Union v Mudginberri Station Pty Ltd (1986) 161 CLR 98 at 106 - 107; Louis Vuitton Malletier SA v Design Elegance Pty Ltd [2006] FCA 83; 149 FCR 494 at [6]; Metcash Trading Ltd v Bunn (No 5) [2009] FCA 16 at [9]; Kazal v Thunder Studios Inc (California) [2017] FCAFC 111; 256 FCR 90 at [26]; Jorgensen v Fair Work Ombudsman [2019] FCAFC 113; 371 ALR 426 at [9] - [10]. Hence, the Commission's characterisation of Garuda's conduct in the present case as deliberate and wilful. 48 However, in order for the failure to be deliberate and wilful in the requisite sense, it must be shown that the person who is subject to the order had the capacity to comply with it, in whole or in part: Netsafe at [51]. The burden of showing this rests on the party alleging the contempt. 49 It is at this point that the Commission's case runs into difficulty. The Commission argues that Garuda has not provided a plausible explanation for its failure to comply with the pecuniary penalty order. This is not entirely correct as a matter of fact. In correspondence with the AGS, Norton White advised the Commission that those with responsibility within Garuda for processing payment of the pecuniary penalties were required to await the direction of the Indonesian Ministry for State Enterprises. This was because Garuda was subject to control by the Indonesian Government and the requirements of Indonesian law: see also in this connection the findings quoted at [39] above. Further, Mr Rizal's affidavit, which the Commission advanced in this application (albeit, for the purposes of criticism) spoke of Garuda's financial incapacity to pay the pecuniary penalties, at least within the extended period within which compliance was required: Netsafe at [52] - [53]; [57]. 50 The evidence of these matters might not have been sufficiently persuasive to warrant the Court granting, on Garuda's application, a stay of the pecuniary penalty order. But it cannot be said that Garuda has not provided a plausible explanation. Whether it can be said that, by advancing these matters, Garuda has justified its failure to comply with the pecuniary penalty order, is another question. 51 However, in this application, Garuda does not bear an onus to justify its non-compliance. It is for the Commission to establish the fact of contempt, just as it would be for the Commission to establish the fact of contempt in proceedings brought under s 31 of the Act to punish that contempt. The Commission's criticism that Garuda has not provided a plausible explanation for its non-compliance fails to grasp the reality that it is the Commission which must persuade the Court that Garuda is in contempt of the pecuniary penalty order such as to justify the Court staying Garuda's appeal. Garuda is not to be criticised for not discharging an onus it does not bear. Moreover, I do not think it is to be criticised for not adducing further evidence on these matters in the present application when the prospect of proceedings against it under s 31 remains. As Garuda argued in its written submissions: … In circumstances in which an unparticularised finding of contempt is sought against Garuda in the appellate jurisdiction as a precursor to an application in the original jurisdiction that Garuda be punished for that contempt, the only inference to be drawn from Garuda's reticence is that it is conducting itself as any prudent accused would. 52 Real and substantial questions have been raised concerning Garuda's legal and financial capacity to comply with the pecuniary penalty order. The state of the evidence is such that, having been raised, those questions cannot be resolved in a way that would lead to a finding that Garuda is in contempt, whether, in the present context, the standard to be applied is the criminal standard of proof or the civil standard of proof (a question I need not decide). Indeed, the Commission accepts that, on the material before it, the Court cannot form any view as to whether Garuda's failure was deliberate and wilful: see [26] above. Although this concession, which was made in oral submissions, is incongruent with the position advanced in the Commission's written submissions, it was properly made. 53 I do not accept, however, the Commission's further submission that, absent its proof of Garuda's contempt, its application for a stay can nevertheless succeed by relying on a general discretion in the Court to control its own processes. The power to grant a stay cannot be exercised as a matter of bare discretion. Although exercise of the power to grant a stay of proceedings involves an exercise of discretion, the discretion must be exercised judicially. That being so, there must be a principled and substantive basis for the discretionary exercise of the power in question. 54 The basis which the Commission advanced in its written submissions, and which Garuda came to meet, was that Garuda was in contempt of the pecuniary penalty order. As I have said, I do not understand the Commission to have abandoned the case it put in its written submissions, even though it appeared to shy away from this case in the course of oral submissions. The Commission certainly did not express any such abandonment. In any event, I would not be minded to take so drastic a step of staying the appeal without being persuaded that Garuda's failure to comply was deliberate and wilful in the requisite sense, and hence in contempt of the pecuniary penalty order. 55 Even if contempt of the pecuniary penalty order had been established by the Commission, that would not be an end to the matter. There remains a debate about whether there is a rule that a contemnor cannot be heard in respect of an application to the Court made on its behalf, or whether the Court has a discretion to refuse to hear such a party. The competing views are discussed in Hwang, Foster and Stokes, among other authorities. The debate need not be repeated here, still less the various authorities surveyed. It is accepted that the "rule" is subject to exceptions, including an exception that the contemnor can appeal with a view to setting aside the order upon which the alleged contempt is founded: Hadkinson v Hadkinson [1952] P 285 (Hadkinson) at 288 - 289 per Romer LJ. The same consideration would inform the exercise of a discretion to refuse to hear a contemnor. In Hadkinson, Denning LJ (at 298) concluded that a party who has disobeyed a court order should not be barred from being heard unless the disobedience, so long as it continues, impedes the course of justice in the cause by making it more difficult for the court to ascertain the truth or to enforce the orders it may make. 56 As Lindsay J put it in Stokes at [49]: 49 Despite appearances, the respective approaches of Romer and Denning LJJ might be thought to complement, rather than to contradict, one another. They approach the same question (namely, whether a contemnor should be heard) from opposite sides. Romer LJ's approach starts with a negative answer then explores competing factors. Denning LJ's approach starts with an affirmative answer, then considers competing factors. Both approaches require the court to examine factors bearing upon the administration of justice generally and the dictates of justice in the particular case. … 57 Here, Garuda seeks to appeal against the making of the order in respect of which it is said to be in contempt. This provides a sound reason for refusing the stay that the Commission seeks. The fact that Garuda wishes to challenge the correctness of making the pecuniary penalty order does not signify that it is defiant of the Court's authority. There is no other conduct that manifests defiance on its part. 58 Having reached these conclusions, a number of other questions raised during the course of the hearing need not be decided. In particular, it is not necessary for me to decide which of the competing constructions of s 25(2B)(ab) that the parties have advanced should be accepted and whether, as a single Judge exercising the appellate jurisdiction of the Court, I could grant the stay that the Commission seeks. As I have noted, it is also not necessary for me to decide whether, in an application other than under s 31 of the Act, the criminal standard of proof or the civil standard of proof applies to establish the existence of the alleged contempt relied on. 59 Garuda also raised the argument that, in this application, it should have been provided with a statement of charge under r 42.12. That question, too, need not be decided, although I am inclined to the view that the rule only applies to proceedings under s 31 of the Act to punish a contempt. That said, if a contempt is alleged as a basis for making an order outside proceedings commenced under s 31, I accept that the basis for the contempt should be clearly stated. In the present case this was done in the Commission's written submissions. I do not accept that the absence of a statement of charge in the present application has obscured the way in which the Commission has advanced its case or impeded Garuda in adducing evidence. Had there been any difficulty encountered by Garuda in understanding the basis of the Commission's application, it could have approached the Court for procedural directions. It did not do so. Nonetheless, I repeat my earlier observation that Garuda is not to be criticised for not discharging an onus it does not bear, nor is it to be criticised for not adducing further evidence in the present application when the prospect of proceedings against it under s 31 remains.

Leave to amend the notice of appeal 60 Garuda seeks leave to amend its notice of appeal by adding a further ground that the Court exceeded its power by imposing a time limitation ("within 28 days") in the pecuniary penalty order. It has articulated the substance of the arguments it wishes to advance if leave to amend is granted. With that amendment, Garuda not only appeals against the order said to be the basis of its contempt, it challenges the power of the Court to make that order. 61 The Commission opposes leave to amend being granted. It says that the ground which Garuda wishes to raise is devoid of merit, with the consequence that to grant leave would be futile. 62 I do not propose to canvass the competing arguments, still less express a view as to the prospects of success of this new ground, other than to say that I do not accept that it is so devoid of merit that Garuda should be denied the opportunity to advance it. Therefore, Garuda should be granted leave to amend its notice of appeal.

Disposition 63 The Commission's application for a stay of the appeal until further order will be dismissed, with costs. Leave will be granted to Garuda to amend its notice of appeal. I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Yates.