Case: Hughes (trading as Crowded Planet) v Australian Competition &amp; Consumer Commission [2004] FCAFC 319
Outcome: cited
After considering the proposed orders, the history of this matter, and the submissions of Counsel I am satisfied that the orders proposed by the parties in relation to the contempt charges are appropriate in the circumstances. My reasons are as follows: 1. I accept the applicant's submissions in relation to withdrawing the charges against the first respondent. I note that the first respondent is in liquidation, and the submission in Court on Monday by Mr Aggs, liquidator of the first respondent, that the first respondent is insolvent. I accept the proposition that, in these circumstances, pursuit of the first respondent, which is a corporate entity, is pointless. There are no funds to satisfy any orders, for example, for a fine or costs. It is therefore appropriate for the Court to grant leave to the applicant to withdraw these charges. 2. I accept the applicant's submissions as to withdrawing the charges against the fifth respondent, in light of his age, his role in the conduct the subject of the applicant's claims, and the concession by the applicant as to the evidence against him. 3. I note that the second, third and fourth respondent have pleaded guilty, which is an issue to be taken into consideration for the purposes of sentence ( NW Foods 71 FCR at 293). I note also the submission of Mr Atkinson for the second, third and fourth respondents that, in pleading guilty, the respondents have avoided the need for two trials, each of which was estimated to be four to five weeks, and have therefore relieved the resources of both the Court and the applicant (cf NW Foods 71 FCR at 291). 4. In this case, the second, third and fourth respondents have pleaded guilty to a statement of charge alleging deliberate and repeated instances of contempt of the orders of Cooper J. Given the nature of the contempt, a significant penalty is in order. 5. The Courts have generally accepted that a term of imprisonment is appropriate only in the most serious criminal contempt cases: R v Fletcher; Ex parte Kisch [1935] HCA 1 ; (1935) 52 CLR 248 at 257 per Evatt J, Gallagher v Durack [1983] HCA 2 ; (1983) 152 CLR 238. In this case the proposal of the parties that the third and fourth respondents be sentenced to six months imprisonment, albeit suspended, is at the high end of the range of penalty for contempt, particularly as it is common ground that the respondents had not previously been found by the Court to have acted in contempt. However, the serious nature of the contempt charges in this case, to which the second, third and fourth respondents have pleaded guilty, in my view warrants the prospect of a period of imprisonment. 6. The Federal Court is empowered to impose a sentence of imprisonment for contempt of court, to be suspended on conditions including as to length of time of the suspension: Hughes (trading as Crowded Planet) v Australian Competition &amp; Consumer Commission [2004] FCAFC 319 at [56] . In the case before me, the proposal that the sentence of six months be suspended for two years is consistent with other decisions involving similarly serious contempts of court (cf Hughes [2004] FCAFC 319 at [57] ). 7. In my view, however, while the sentence is at the higher range, it is not so high as to be oppressive ( NW Foods 71 FCR at 293, cf Australian Securities and Investments Commission v Matthews (2001) 39 ACSR 110 where the contemnor was sentenced to twelve months imprisonment, suspended for two years and the Court similarly found that the sentence was not so high as to be oppressive). 8. I note the parties jointly propose that the period of imprisonment of the third and fourth respondents be suspended. In this context however I note that the applicant in this case is the State regulator in the field of consumer protection. It is appropriate to accord weight to the views of the regulator, in particular as to the deterrent quality both for the respondents and for others who may be disposed to engage in conduct of a similar kind ( NW Foods 71 FCR at 292, Mobil Oil [2004] FCAFC 72 at [79] ). 9. Although the award of costs is at the discretion of the Court, commonly in contempt cases there is a link between the award of indemnity costs and the penalty, where the award of costs is in lieu of a fine: Construction, Forestry, Mining &amp; Energy Union v BHP Steel (AIS) Pty Ltd [2003] FCAFC 13 per Moore J at [8]-[12]. In this case the proposed orders do not include a fine to be paid by the second, third and fourth respondents, however they do impose an obligation on these respondents to pay a not insignificant sum in costs to the applicant. 10. I am satisfied that this is not a case where the nature of the proposed penalty is an insufficient deterrent by community standards so as to cause the Court to decline to sanction the proposal. I note the submissions by Mr Atkinson that the suspension of the six month sentence results in the third and fourth respondents being their own "judge and jury" for 24 months and that this is well-calculated to ensure their good behaviour. While this remains to be seen in practice, the detailed and clear nature of the proposed orders, the permanent restraints on the conduct of the respondents as articulated in the proposal, the not inconsiderable length of time during which the sentence is suspended and the default period of imprisonment in the event of breach of the orders in my view means that the proposed penalty appropriate in this case.