Case: Witham v Holloway [1995] HCA 3 ; (1995) 183 CLR 525
Outcome: applied
Deliberate conduct which is in breach of a court order will constitute wilful disobedience of the order, and therefore a civil contempt, unless the conduct be casual, accidental or unintentional: see Australian Meat Industry Employees' Union v Mudginberri Station Pty Ltd [1986] HCA 46 ; (1986) 161 CLR 98 at 106-107 (' Mudginberri ') and 112-113. However, the disobedience will amount to a criminal contempt if it involves 'deliberate defiance or, as it is sometimes said, if it is contumacious': see Witham v Holloway [1995] HCA 3 ; (1995) 183 CLR 525 (' Witham ') at 530. As is apparent from the Statement of Charge, Louis Vuitton is alleging both civil and criminal contempt. However, as all proceedings for contempt are now regarded as criminal in nature, all of the charges must be proved beyond reasonable doubt: see Witham at 534. 33 Criminal contempt is an indictable offence at common law: see John Fairfax &amp; Sons Pty Ltd v McRae [1955] HCA 12 ; (1955) 93 CLR 351 at 364. However, civil contempt constituted by the mere failure to comply with an order or a deliberate, but not contumacious, breach of an order was traditionally regarded as a matter for the parties, rather than for the courts. Thus, traditionally, the dichotomy between civil and criminal contempt claims had the consequence that civil, but not criminal, contempt may be waived by the aggrieved party: see Witham at 533 and 540, Poj &eacute; v Attorney-General of British Columbia [1953] 1 SCR 516 (' Poj &eacute;') and Gompers v Buck Stove &amp; Range Co 221 US 418 (1911) (' Gompers '). 37 However, the traditional approach that enabled that outcome may need to be revisited in the light of Witham in which Brennan, Deane, Toohey and Gaudron JJ (at 532-534) observed: 'At best, the distinction between proceedings in the public interest and proceedings which are coercive or remedial in the interest of the private individual supports a separate category of civil contempt to the extent that it clearly appears that the proceedings are remedial or coercive in nature. ... However, in our view, there are fundamental problems even with that approach. One problem is that there is not a true dichotomy between proceedings in the public interest and proceedings in the interest of the individual. Even when proceedings are taken by the individual to secure the benefit of an order or undertaking that has not been complied with, there is also a public interest aspect in the sense that the proceedings also vindicate the court's authority. Moreover, the public interest in the administration of justice requires compliance with all orders and undertakings, whether or not compliance also serves individual or private interests. Nor can the dichotomy between proceedings in the public interest and proceedings in the interest of the individual be maintained on the basis that some cases involve an interference with the administration of justice and others merely involve an interference with individual rights. All orders, whether they be Mareva injunctions, injunctions relating to the subject matter of the suit, or, simply, procedural orders, are made in the interests of justice. Non-compliance necessarily constitutes an interference with the administration of justice even if the position can be remedied as between the parties. Moreover, there is considerable difficulty with the notion that, in some cases, the purpose or object of the proceedings is punitive and, in others, the purpose or object is remedial or coercive. It should at once be noted that the purpose of the proceedings is not the same as the purpose or object of the individual bringing the proceedings and it is well recognised that, notwithstanding that proceedings are brought by an individual to secure the benefit of an order or undertaking, a "penal or disciplinary jurisdiction" may also be called into play. It has been held that the "penal or disciplinary" jurisdiction may be exercised even when the parties have settled their differences and do not wish to proceed further. Thus, in Canadian Transport v Alsbury , Sidney Smith JA rejected the submission that settlement precluded further proceedings saying: "Are we to be told that after a party has defied a court, the court can still do nothing because the other party is willing to swallow the contempt? Nothing short of the clearest authority would convince me that that is the law; and there is no such authority and no such law." And as already indicated, proceedings for breach of an order or undertaking have the effect of vindicating judicial authority as well as a remedial or coercive effect. Indeed, if the person in breach refuses to remedy the position, as is not unknown, their only effect will be the vindication of judicial authority. Given that purpose or object cannot readily be disentangled from effect and given, also, that a penal or disciplinary jurisdiction may be called into play in proceedings alleging breach of an order or undertaking, it is necessary to acknowledge, as it was in Mudginberri , that punitive and remedial objects are, in the words of Salmon LJ "inextricably intermixed". Moreover and, perhaps, of more importance, nothing is achieved by describing some proceedings as "punitive" and others as "remedial or coercive". Punishment is punishment, whether it is imposed in vindication or for remedial or coercive purposes. And there can be no doubt that imprisonment and the imposition of fines, the usual sanctions for contempt, constitute punishment. And the same is true of a sequestration made in consequence of a company's failure to comply with an order or undertaking. The differences upon which the distinction between civil and criminal contempt is based are, in significant respects, illusory. They certainly do not justify the allocation of different standards of proof for civil and criminal contempt. Rather, the illusory nature of those differences and the fact that the usual outcome of successful proceedings is punishment, no matter whether primarily for the vindication of judicial authority or primarily for the purpose of coercing obedience in the interest of the individual, make it clear as Deane J said in Hinch , that all proceedings for contempt "must realistically be seen as criminal in nature". The consequence is that all charges of contempt must be proved beyond reasonable doubt.' (footnotes and citations omitted) See also McHugh J at 539-541 and 549. 38 Witham did not go so far as to decide that the distinction between civil and criminal contempt no longer existed, although McHugh J observed (at 549) that the 'case for abolishing the distinction between civil and criminal contempt is a strong one'. However, the conclusion that all contempts arising from a breach of a court order are criminal in nature, involve punishment and necessarily involve the public interest in the administration of justice by vindication of the court's authority, plainly undermines the traditional rationale for allowing civil contempt cases to be settled, that rationale being that contempt cases may be settled because they are proceedings in the interest of the aggrieved party that are remedial or coercive, rather than punitive, in nature. 39 The distinction drawn in the majority judgment in Witham between the purpose of a contempt proceeding and an aggrieved party's purpose in bringing a contempt proceeding is significant. It was in that context that their Honours referred to the observation in Canadian Transport v Alsbury (1952) 7 WWR (NS) 49 (which was affirmed on appeal in Poj &eacute;) that it is not the law that a party's willingness to 'swallow the contempt' has the consequence that the court can do nothing about it. As was observed in Poj &eacute; at 520 a contempt may be civil or criminal 'depending upon the nature and quality of the conduct in question in any particular case'. It must follow that, as a claim based inter alia on a breach of a court order has the potential to be a claim of both civil and a criminal contempt, there is some difficulty in purporting to offer to settle, or in settling, the 'contempt' claim. 42 When regard is had to Witham there is some difficulty in contending that a contempt claim is not of public concern and does not involve any interest of a public character. 43 In the present case, I need not go so far as to find that claims of contempt resulting from breach of a court order cannot be compromised or settled; there was no compromise or settlement of the contempt claims that were pressed by Louis Vuitton at the hearing. However, Louis Vuitton made offers to Maskiell to compromise or settle the claims it was entitled to pursue as a result of her re-infringing conduct in breach of the Court's orders. The issue is whether Louis Vuitton's conduct in relation to those offers ought to result in it not receiving any orders for costs and being required to pay for any costs incurred by the respondents in raising issues concerning the propriety of that conduct. 44 Plainly, where conduct is in breach of a court order, but also gives rise to private claims for relief, the private claims may be compromised or settled. However, in the light of Witham , an aggrieved party and its solicitors should exercise prudence and caution when offering to settle claims arising out of the contravening conduct. That is particularly so when they are dealing with a litigant in person. The reason for that is that breach of a court order is criminal in nature, may result in fines and imprisonment and has the potential to constitute a criminal contempt. Accordingly, there is a real risk of impropriety, and possibly illegality, if an offer to compromise or settle the claims of the aggrieved party in respect of the contravening conduct is not reasonably and fairly based on the legal right to relief the aggrieved party has, or may have, in respect of that conduct. In other words, if the threat or prospect of contempt proceedings is used to obtain a compromise or settlement beyond that to which the aggrieved party would be entitled as a matter of law, the threat may amount to improper pressure, duress or even extortion. 45 While the law may be in an uncertain state on this issue, it is plainly prudent that any offer of a settlement or compromise of private claims, which arise out of conduct in breach of a court order, should clearly specify the private claims that are being settled and make quite clear what is intended, or not intended in respect of the contempt claim. For example, a private litigant is not under a duty to prosecute a contempt claim. Therefore, provided that there is still a distinction between civil and criminal contempt, it may not be improper for a party to indicate that, if that party's non-contempt claim is resolved, that party does not intend to prosecute the contempt claim. Further, even if a prosecution has commenced, it may not be improper for the prosecuting party to agree to seek to discontinue the contempt claim provided an adequate disclosure is made to the Court. However, it is clear that, save where the issue of contempt is entirely excluded from the offer, the offer should be limited to matters that fall within, and do not travel beyond, the legal entitlement of the aggrieved party. At the least, the offer should be based on a reasonable and reliable estimate of that entitlement. 46 In that context, I turn to consider the offers made by Louis Vuitton to compromise or settle its claims against Maskiell and Design Elegance arising as a result of their breaches of the consent orders.